By Justin Mays:
Turkey’s economy outpaced that of its G-20 peers in the
fourth quarter of 2021 with a growth of 11% - the highest in a decade. This was
driven by a surge in exports, interest rate cuts, and increased domestic
consumption. Gross domestic product rose 9.1% in the October-to-December period
from the previous year and ended 2021 with the highest annual figure among the
other G-20 nations.
Interest rate cuts accelerated economic recovery due to the
pandemic. The Central Bank cut interest rates by 500 basis points in four
consecutive moves from September to the end of 2021. These cuts led to an
uptick in spending and a rocky period for the lira exports, especially to
key European markets, increase while price gains accelerated to their highest
in two decades. Exports rose 20.7% during the first quarter alone while
household consumption, accounting for more than half of the economy, rose by
21.4%.
President Tayyip Erdogan is implementing an economic plan
that prioritizes growth, employment, investment, and exports driven by a series
of unorthodox interest rate cuts which have brought the central bank's policy
rate down to 14%.
High annual growth is expected for 2022 Q1 with the Turkish
government’s official target at 5%.
Turkey was one of the few countries to expand economic growth in 2020 despite the pandemic’s economic impact. As pandemic restrictions lifted in 2021, the economy continued to grow although much of the world experienced an economic downturn.
