Turkey’s economy displays positive growth trajectory
Date
11/3/2024 4:41:28 AM
(MENAFN) The Turkish Economy is on a positive trajectory, with improving confidence indices and more optimistic outlooks for inflation and future economic conditions. After reaching a peak of 100 in March, the economic confidence index dipped, bottoming out at 93.1 in August, but has since climbed back to 98 in October—a five-month high. Likewise, consumer confidence, which hit a low of 75.9 in July, saw steady growth, reaching 80.6 in October, marking its highest level in 16 months. The real sector confidence index, beginning the year at 102.9, similarly fell to 98 in August but rebounded to 102.2 in October, also hitting a five-month high. Services confidence showed more variation, yet reached a four-month high at 114.2 in October.
Expectations for 12-month-ahead inflation have declined across various sectors, reflecting more stable projections. The Turkish Central Bank (TCMB) estimated the 12-month-ahead inflation at 45.28 percent in October 2023, which decreased to 27.44 percent in October 2024. For the real sector, inflation expectations peaked at 70.1 percent in November 2022, then fluctuated before dropping to a 15-month low of 49.5 percent in October. Household inflation expectations, though initially higher, fell from 88.27 percent in August 2023 to 68.23 percent in October—its lowest in two and a half years.
Sefer Sener, an economics professor at Istanbul University, noted that the downward trend in inflation estimates for households, the real sector, and the TCMB since August 2023 can be attributed to the government's shift toward more rational economic policies. He highlighted how essential macroeconomic improvements, such as gains in the current account balance, budget performance, and unemployment rate, are exerting downward pressure on inflation. Additionally, the rise in the TCMB's reserves has further strengthened expectations of sustainable inflation control.
This positive economic momentum is also evident in increased portfolio and foreign direct investments, reduced risk premiums, and upgrades to Turkey's credit rating. The country’s removal from the Financial Action Task Force (FATF) Grey List has reinforced the economic administration’s efforts against inflation. Sener emphasized that while challenges remain, these developments underscore Turkey’s progress in achieving stability and confidence in its fight against inflation.
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