EBRD keeps Türkiye forecast unchanged but notes
improvements
By Dilara Sarı
26 Sep 2024
- EBRD keeps its Türkiye growth forecasts unchanged
- Growth expected at 2.7 per cent in 2024, 3.0 per cent in 2025
- Risks include high inflation and geopolitical tensions
The European Bank for Reconstruction and Development (EBRD) is expecting Türkiye to grow by 2.7 per cent in 2024, maintaining its May forecast.
Economic growth is predicted to pick up to 3.0 per cent in 2025, driven by a rebalancing of growth drivers and the boost in investor confidence.
The forecasts were published today in the Bank’s Regional Economic Prospects report, which includes a downward revision to growth in the EBRD regions, expected at 2.8 per cent in 2024, picking up to 3.5 per cent in 2025.
The report highlights the recent policy changes in Türkiye, as well as the country’s removal from the Financial Action Task Force (FATF) grey list in June 2024, as factors that helped improve investor confidence. Türkiye’s credit default swap premium also declined significantly over the last year.
The report, however, identifies key risks in the Turkish economy, namely persistently high inflation, the impact of the real appreciation of the Turkish lira on exports and tourism, high geopolitical tensions in the region, and tight global financing conditions given the extensive short-term external financing needs.
The current account deficit has been declining, according to the report, but short-term external debt remains high in the country, equivalent to 20 per cent of GDP.
In 2023, the EBRD invested a record €2.5 billion in Türkiye, with more than half going to- projects supporting the country’s green transition.
A recently published country diagnostic by the EBRD suggested that Türkiye needed to increase productivity and improve human capital development, while expanding the private sector’s access to finance. Reinvigorating the structural reform agenda and addressing systemic issues affecting the country’s long-term growth potential were also identified as measures that could help Türkiye reach its economic potential.
Country diagnostics are an EBRD tool to identify the main obstacles to entrepreneurship and private sector development and to help shape the Bank’s strategic priorities.
The EBRD is among Türkiye’s key investors, with more than €20 billion invested through 453 projects and trade finance limits since 2009, most of which was in the private sector.
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