IMF upgrades Türkiye 2024 growth forecast to 3.6%

Türkiye’s economy is forecast to grow faster than earlier expected this year, but the pace in 2025 is estimated to be slower than it was projected three months ago, the International Monetary Fund said on Tuesday.

A 190-nation lending organization, the IMF sees the Turkish economy expanding by 3.6% this year, up from its earlier forecast of 3.1% reported in April.

In an update to its World Economic Outlook, the fund said the economy would grow 2.7% next year, down from its earlier estimate of 3.2%.

Türkiye’s gross domestic product (GDP) expanded by 5.7% in the first quarter, one of the world’s highest growth rates at the start of the year, driven by robust domestic demand despite tight monetary policy.

Growth is expected to moderate during the rest of the year as the central bank’s series of aggressive interest rate hikes in the face of soaring inflation weigh on economic activity.

Annual inflation dropped to 71.6% in June from a peak above 75% in May, beginning what is expected to be a sustained downward trend. The central bank has kept its policy rate at 50% in recent months after an aggressive tightening campaign and sees inflation ending the year at around 38%.

The IMF kept its 2024 global real gross domestic product (GDP) growth forecast unchanged from April at 3.2% and raised its 2025 forecast by 0.1 percentage point to 3.3%.

The forecasts fail to shift growth from the lackluster levels that IMF Managing Director Kristalina Georgieva has warned would lead to “the tepid twenties.”

The fund warned that momentum in the fight against inflation is slowing, which could further delay an easing of interest rates and keep up strong dollar pressure on developing economies.

The revised outlook reflected some shifting sands among major economies, with the 2024 U.S. growth forecast reduced by 0.1 percentage point to 2.6%, reflecting slower-than-expected first-quarter consumption.

The fund’s 2025 U.S growth forecast was unchanged at 1.9%, a slowdown driven by a cooling labor market and moderating spending in response to tight monetary policy.

The IMF significantly hiked its China growth forecast to 5.0% – matching the Chinese government’s target for the year – from 4.6% in April due to a first-quarter rebound in private consumption and strong exports. The IMF also boosted its 2025 China growth forecast to 4.5% from 4.1% in April.

On a more positive note, the IMF slightly upgraded its 2024 eurozone growth forecast by 0.1 percentage point to 0.9%, leaving the bloc’s 2025 forecast unchanged at 1.5%.