IMF Raises Turkish Economic Growth Forecast to 4%

Shoppers in a market in Istanbul. (AP)

The International Monetary Fund and the World Bank have revised upward their economic growth forecasts for Türkiye despite the earthquake that hit the country on 6 February.

The IMF announced that growth is projected to be 4 percent in 2023 and 3¼ percent in 2024. “Sequential inflation should also fall in 2024 and is projected at 46 percent year-on-year by December.”

James P. Walsh, who led a staff team from the IMF in a visit to Türkiye last month, said in a statement on Saturday that “Despite the tragic earthquakes in February, growth has remained resilient.”

Two days ago, the WB revised its economic growth forecast for Türkiye for this year upward from a previous 3.2 percent to 4.2 percent.

In its Europe and Central Asia Economic Update report, the bank forecasts the Turkish economy to expand by 3.1 percent next year and 3.9 percent in 2025, a downward revision from its previous estimates of 4.3 percent and 4.1 percent, respectively, in June.

Last week, credit ratings agency Standard & Poor's (S&P) affirmed Türkiye's credit rating at B and revised its outlook from "negative" to "stable."

It also forecasts Türkiye's GDP to grow to 3.5%, and to 2.3% in 2024.

The Turkish economy is projected to grow 4% next year, 4.5% in 2025, and 5% in 2026, according to the government's medium-term economic program released last month.

Türkiye's year-end inflation rate is expected to come in at 65% this year, 33% next year, 15.2% in 2025, and 8.5% in 2026, according to the program.

In Sep., the Central Bank raised the interest rate to 30%.

Governor of the Turkish Central Bank Hafize Gaye Erkan confirmed during the Planning and Budget Commission of Parliament meeting on Wednesday that “At this point, the objective should be to steadfastly continue the process of disinflation while not deviating from the growth composition necessary for sustainable growth.”

Türkiye’s annual consumer price inflation climbed to 61.53% in September 2023.

Erkan noted that the central bank reserves increased by 27 billion dollars in four months and reached $125.5 billion.