As Predicted, Turkiye's 2024 GDP Growth Hit 3.2% YoY

Figure 1: GDP (%, YoY), Q1 2020 – Q4 2024

Source: Continuum Economics

Turkish economy expanded by 3.0% YoY in Q4, -after growing by 2.4% YoY in Q2 and 2.2% YoY in Q3-, backed by private consumption and robust investments, while the contribution of net exports turned negative again in Q4. (Note: Full-year growth in 2024 stood at 3.2% YoY).

TUIK’s data revealed that households’ final consumption increased by 3.9% YoY in Q4, accelerating from 2.6% in Q3. For the full-year, the increase in household consumption was 3.7%. Investment appetite strengthened with 6.1% YoY in Q4, against the 0.1% decline in Q3.

Speaking about Q4 growth rate, Treasury and Finance Minister Mehmet Simsek said on February 28 “More favourable financial conditions in line with disinflation, increased predictability with our policies and improved confidence positively affect economic activity.” Simsek added that “Increased growth among Turkey’s trade partners, more supportive global financial conditions and moderate commodity price expectations will positively affect growth in 2025, but increasing protectionist policies in global trade and geopolitical developments are among the risk factors.”

Taking into account that we expect Central Bank of Turkiye (CBRT) will continue its cutting cycle the rest of 2025, and likely reduce the key rate to 30%, a continued recovery in GDP growth in 2025 is probable.

Despite this, we also think growth will be under pressure due to contractionary fiscal actions and additional macro prudential policies to fight against the elevated inflation. Additionally, adverse geopolitical developments including increases in tariffs will be the risk factors. Despite the government targets a GDP growth of 4% YoY in 2025, and 4.5% in 2026, we feel anti-inflation measures coupled with global uncertainties will likely continue to dent growth in 2025 as achieving 4% YoY growth in 2025 will be tough.