Türkiye | The economy grew by 4.5% in 2023

Turkish economy grew by 4.0% y/y in 4Q23 (vs. 3.6% exp. and consensus), leading to an overall GDP growth of 4.5% in 2023. We maintain our 2024 GDP growth forecast of 3.5%, for which we envisage pre-election fiscal impulse and expected capital inflows will be supportive.

Key points

• Key points:
• Despite the upsurge in geopolitical tensions, the deceleration in global economic activity and the negative impact of the quakes, Turkish economy managed to grow above its potential with 4.5% in 2023.
• The acceleration to 1% quarterly GDP growth in 4Q23 (0.3% in 2Q23) compared to much weaker sectorial output signaled a worsening outlook in production decomposition.
• On the demand side, private consumption continued to boost domestic demand in 4Q23, slowing down the needed rebalancing in the economy. Yet, the contribution of domestic demand continued to decelerate, while the negative impact from net exports weakened.
• On the income front, the share of wages in value added increased to 33% in 2023 (26% in 2022) but still remained below the level between 2015 and 2020, showing limitedly improving conditions in favor of the employees.
• Our GDP nowcast indicators signal an acceleration in the activity with annual growth rate reaching 5.1% in March 2024, most likely led by the continuing fiscal impulse and inadequate tightness of financial conditions to suppress still solid private consumption.

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