Newsletters & Press

The double earthquake that occurred in February 2023 was likely to be the defining event of this year. An unprecedented tragedy which has become the worst natural disaster of our time with an extremely heavy human toll: more than 50,000 dead and more than 100,000 injured. The area of the 11 affected regions reached 100,576 km2. The material damage caused by these devastating earthquakes was estimated at more than 100 billion USD by the UN.

Economically, inflation continued to be the government’s primary concern. After the re-election of President Erdogan in the presidential elections in May 2023, the new economic team put in place undertook a total change in monetary policy by starting a series of increases in its key rate. Thursday, December 21, was the 7th consecutive month of increase, raising the rate to 42.5%. The Central Bank nevertheless gave signs of slowing down the process of monetary tightening because the level of monetary tightening would be "significantly close to that required to establish the course of disinflation" according to a press release. The institution expects inflation to rise from nearly 62% in November to a range of 70% to 75% in May 2024, before falling back to around 36% at the end of next year. For several years, Turkey has faced galloping inflation which has seen its currency considerably weakened. The turkish lira is down 35% against the dollar since the start of the year and has lost more than 80% of its value against the greenback over the past five years.

Despite a difficult year, 2023 ends on rather optimistic economic notes with three consecutive quarters of sustained growth (4% in Q1, 3.8% in Q2 and 5.9% in Q3) and a historically low unemployment rate. On the investment side, foreign companies have maintained their commitment to Turkish territory. During the first ten months of the year, the country welcomed 7.8 billion USD in foreign direct investments (FDI) with France being part of the top 5 countries having invested the most during the said period (315 million USD) illustrating the strengthening of Turkey's attractiveness. FDI flows were mainly towards wholesale and retail trade, storage, the chemical industry and ICT. This year again, the country has particularly established itself as a popular destination for sourcing by European manufacturers who continue to look for sources of diversification of their supplies outside of East Asia and close to their market.

Internationally, Turkey should continue to benefit from the advantages of its geostrategic position to pursue its role as mediator in the region which remains particularly vulnerable in terms of international diplomacy. The continuing war in Ukraine and Syria, tensions in Nagorno-Karabakh and the recent outbreak of conflict between Palestine and Israel leading to an unprecedented humanitarian disaster in Gaza are expected to reaffirm Turkey as a key regional player in the Middle East.

Finally on the domestic political side, after the presidential and legislative elections of May 2023, the poll of which saw the victory of the Popular Alliance (led by the Justice and Development Party, AKP, and by the Nationalist Action Party, MHP ) which retained the absolute majority of seats and the re-election of President Erdoğan, the year 2024 will be marked by the municipal elections which will take place next March.