Newsletters & Press

May 2022

Investor confidence, both domestic and international, has improved thanks to a return to more orthodox policies and an improvement in Turkey's sovereign rating. Indeed, at the beginning of May, Standard & Poor's raised the country's sovereign credit rating from "B" to "B+", while maintaining the outlook at "positive". A decision which follows the increase in Turkey's credit rating by the rating agency Fitch Ratings last March, raised to B+ with an outlook revised from stable to positive.

It is in this context that the OECD revised upwards its GDP growth forecast for Turkey for 2024, from 2.9% to 3.4%. This improvement is also due to strong investment activity linked to reconstruction after the 2023 earthquakes. Exports are expected to gradually strengthen thanks to an improved external environment. The OECD, however, forecasts a slight slowdown in growth to 3.2% in 2025.

At the same time, the EBRD forecasts growth in the Turkish economy of 2.7% in 2024, revised downwards from a previous forecast of 3%, due to a continued tightening of monetary and fiscal policies in the face of a persistent inflation. The institution forecasts an increase to 3% in 2025.

To support this austerity policy, the monetary policy committee maintained its key rate at 50% during its last meeting in May. In addition, Turkey announced a three-year savings plan aimed at reducing public spending to control inflation that reached 69.8% year-on-year in April. This plan includes, for example, a ban on the purchase or rental of new public service vehicles for three years, except for “obligatory needs”. The use of imported vehicles in public service will also end. The construction or purchase of public buildings will be suspended for three years except in the event of seismic risks or natural disasters. The number of recruitments in the civil service will be limited to retirements. With this austerity plan, Ankara hopes to save EUR 3 billion.

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