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

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.

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)