Turkiye’s growth forecast edges down to 2.5% in 2023: EBRD

The European Bank for Reconstruction and Development (EBRD) has revised its growth forecast for Turkiye in 2023 down to 2.5 per cent, from a previously projected 3 per cent. This revision is detailed in the bank’s Regional Economic Prospects report, which also lowered its overall 2023 output for the EBRD regions by a slight 0.1 per cent.

The downward adjustment for Turkiye’s economic outlook is attributed to the impact of the February earthquakes and anticipated credit tightening as a response to the country’s external imbalances expected in the latter half of the year, EBRD said in a news release.

The European Bank for Reconstruction and Development (EBRD) has downgraded Turkiye’s growth forecast for 2023 from 3 per cent to 2.5 per cent due to the effects of February’s earthquakes and expected credit tightening.
Despite a strong start to 2023, Turkiye’s economic vulnerabilities persist, and uncertainty over post-election policies may affect growth.

Despite the significant reconstruction burden, Turkiye had a strong start to 2023. The negative output shock related to the earthquakes is estimated to be less than 1 per cent this year. The total damage caused by the natural disasters exceeds $100 billion, as per the report.

There’s continued growth in the current account deficit, and the country’s increasing short-term external debt, low foreign-exchange reserves, and pressure on the Turkish lira were highlighted as additional economic weaknesses.

While robust household and government spending may have boosted growth in early 2023, uncertainties surrounding the post-election economic policies could significantly influence the economy’s trajectory. However, the EBRD predicts that the earthquake-related reconstruction efforts will contribute to growth in 2024, forecasting a 3 per cent expansion.

To date, the EBRD has made substantial investments in the Turkish economy, with a total exceeding €17.3 billion, predominantly in the private sector.

Fibre2Fashion News Desk (DP)

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