Turkey's economy is expected to have expanded 4.3% in 2023, a Reuters poll showed on Monday, as domestic demand boosted the economy, and it should cool off to 2.9% this year with tighter economic policies.
The median estimate in a Reuters poll of 30 economists for 2023 GDP growth stood at 4.3%, very close to the government's medium term programme forecast of 4.4%, with forecasts ranging between 3% and 5.3%, despite a slowdown in main trading partners and devastating earthquakes in February.
The poll also put growth in the fourth quarter at 3.5%, according to the median estimate, in a range between 2.4% and 4.7%. Turkish economy grew an annual 5.5% in 2022 and 3.3% in the last quarter of that year.
The rate of increase in both the retail volume index and real credit card spending eased in the last quarter of the year, but domestic demand continued to be the main driver of growth, said Serkan Gonencler, chief economist at Gedik Yatirim.
"We can easily say that although the contribution of domestic demand decreased in the last quarter compared to previous quarters, it continues to be the main engine of economic growth. Increases in tax revenues, VAT and special consumption tax, also show that domestic demand maintained its strength," Gonencler also said.
The economy grew around 4% in the first two quarters of the year, affected by production disruptions following massive earthquakes that hit the country's southeast in February and by the central bank's low-rates policy before May elections, which encouraged consumers to borrow and spend to get ahead of high inflation and further lira depreciation.
Since June however, the bank has pivoted policy and gradually hiked its benchmark rate to 45% from 8.5%. The government raised some taxes and implemented policies to ease soaring domestic demand. The economy grew by a more-than-expected 5.9% in the third quarter.
GDP growth in 2024 is expected to be 2.9%, based on the median estimate in the Reuters poll, well below the government forecast of 4% set in September. Predictions ranged from 1% to 4%.
The Turkish Statistical Institute will release Q4 and 2023 growth data at 0700 GMT on Feb 29.
