Turkish economy to grow 2.5% – EBRD

The European Bank for Reconstruction and Development (EBRD) has released its latest Regional Economic Prospects report, projecting a growth rate of 2.5 percent for Turkey’s earthquake-affected economy in 2023. This forecast marks a downward revision from the previous report’s expectation of 3 percent GDP expansion.

According to the developments bank, Turkey’s growth is expected to rebound to 3 percent in 2024. The revision for 2023 reflects the impact of the earthquakes that occurred in February 2023, which were not taken into account in the previous forecast. Additionally, the bank cited anticipated credit tightening in the latter half of 2023 as a contributing factor.

The EBRD stated, “Leading economic indicators suggest a strong start to 2023, though the adverse impact of the earthquakes in February is becoming apparent.” While the output shock resulting from the disasters is projected to be less than 1 percent this year, official estimates indicate damages exceeding $100 billion, implying a substantial burden for reconstruction.

The bank highlighted considerable uncertainty regarding the direction of economic policies following the elections. It emphasized the need for authorities to address the growing external imbalances, which are expected to weaken economic activity in the latter part of the year, regardless of the election outcomes.