Turkey’s economy is set to grow by a better-than-expected 4.5 percent in 2023, official data showed on Thursday. It expanded 4.0 percent in the fourth quarter of this year as strong domestic demand offset a slowdown in major trading partners and the impact of a devastating earthquake that struck the country’s southeast in February.
According to data from the Turkish Statistical Institute (TurkStat), gross domestic product (GDP) at current prices is expected to reach $1.12 trillion in 2023, with GDP per capita being $13,110.
A Reuters poll forecast economic growth of 4.3% in 2023, very close to the government’s medium-term plan forecast of 4.4%. GDP growth in the fourth quarter is projected to be 3.5%. An Anadolu Agency (AA) poll forecast growth of 3.97% over the past three months and 4.4% for all of 2023.
Commenting on the data, Finance Minister Mehmet Şimşek noted that the balanced growth composition observed in the third quarter continued in the fourth quarter, adding that the current account balance continued to improve.
“Turkish economy grew by 4.5 percent in 2023, exceeding the Medium-Term Plan (MTP), exceeding $1.1 trillion. Per capita income increased to $13,110. One-third of growth in 2023 will come from investments in machinery and equipment to increase productive capacities. In line with our plan, the balanced growth that began in the third quarter of this year continued in the fourth quarter,” Şimşek said in a post on Twitter.
“Indicators for 2024 point to continued balancing and improvement in the current account deficit. We are on track towards our program targets,” he added.
“In an environment where political stability and confidence ensure economic predictability, we have maintained an uninterrupted growth track record for 14 quarters. The growth achieved at a time when we are experiencing adverse geopolitical forces affecting our region, healing from earthquake wounds and reduced global commercial activity demonstrates the strength of our economy,” Vice President Cevdet Yilmaz said in a statement.
“While we continue to take decisive steps to combat inflation through coordinated monetary and fiscal policy, our economy’s capacity to generate growth through investment, employment, production and exports continues to strengthen.”
The data showed fourth-quarter gross domestic product (GDP) increased 1 percent from the previous quarter on a seasonally and business day adjusted basis.
Final consumption expenditure of resident households increased by 12.8 percent in 2023 compared to the previous year’s chained volume index. The share of household consumption expenditure in GDP was 59.1 percent, the Turkish Statistical Institute said.
Analysing the activities that make up GDP, total value added increased by 9.0% in finance and insurance, 7.8% in construction, 6.4% in services and 4.6% in other services. An increase of 3.8% was recorded in public administration, education, health and social welfare activities.
Total value added rose sharply by 2.7% in real estate, 1.3% in information and communications, 1.2% in professional, management and support services, and 0.8% in manufacturing. The agricultural sector fell by 0.2%.
The data also showed that third-quarter growth was revised upward to 6.1 percent from 5.9 percent. The country’s GDP growth rate was 4 percent in the first quarter of last year and 3.9 percent in the second quarter. The economy is expected to grow 5.5 percent in 2022.
Turkey tops fastest growing economies
In the fourth quarter of last year, Turkey significantly outperformed other countries to become the second-fastest growing economy among member countries of the Organisation for Economic Cooperation and Development (OECD), where economic growth data is published annually.
Croatia took the top spot with 4.3 percent growth, while Turkey came in second and Slovenia followed with economic growth of 2.2 percent.
Among G20 countries, China’s economy is set to expand the most, growing at 5.2 percent annually through 2023, followed by Indonesia at 5 percent and Turkey in third place.
Last year, much of the global economy contracted, with large economies such as Japan and Britain falling into recession and Germany generally stagnating.
Meanwhile, Turkey’s economy expanded for 14 consecutive quarters, including during the COVID-19 period that paralyzed supply chains and disrupted consumption habits around the world.
Ankara Chamber of Commerce and Industry (ATO) Chairman Gürsel Baran also assessed the 2023 GDP data in a written statement, noting that success was achieved while fighting inflation.
Regarding growth in non-agricultural sectors in 2023, Baran said, “Despite the difficulties in the global economy, the impact of the earthquake and inflationary measures, the economic growth rate of 4.5 percent in 2023 shows that Turkey’s strong and stable structure remains.”
However, the pace of growth is expected to slow this year as demand is expected to weaken due to tight monetary policy. Since June last year, the Central Bank of the Republic of Turkey (CBRT) has raised the benchmark one-week repo rate from 8.5% to 45% in an effort to curb inflation.
