Moody's Raises Turkish Economic Growth Forecast for 2023 to 4.2% and 3% for 2024

In a recent update to its Global Macro Outlook 2023-24 report released on Thursday, Moody's has significantly revised its economic growth forecasts for Turkey. The global rating agency now projects Turkish economic growth to reach 4.2% in 2023, up from its previous estimate of 2.6%. Additionally, Moody's has revised its forecast for Turkish economic growth in 2024 to 3%, up from the earlier projection of 2% as stated in a May report.

 Moody's attributed these positive revisions to the strong economic performance witnessed in the first half of 2023, citing Turkey among the countries that exceeded their expectations.  However, Moody's also noted its anticipation of continued tight financial conditions worldwide in the coming year, which it believes will act as a constraint on global economic growth.

 The report highlights that real gross domestic product (GDP) growth for the G-20 countries is expected to slow to 2.5% in 2023 and further to 2.1% in 2024, compared to the 2.7% growth observed in 2022.

 Regarding the United States, Moody's mentioned that the risk of a recession has diminished, but it emphasized that below-average economic output is essential for inflation to consistently decline to the Federal Reserve's target. As a result, Moody's has raised its growth forecast for the American economy in 2023 to 1.9%, up from its earlier estimate of 1.1% in May.

 Moody's also discussed challenges facing China's economy, which have led to a downward adjustment in its growth expectations for 2024, lowering the projection to 4.0% from 4.5%.

 While inflation is expected to decline as planned and continue to do so over the next year, Moody's emphasized that inflation-related risks persist. Major central banks, including the US Federal Reserve, the European Central Bank, and the Bank of England, are anticipated to maintain a restrictive policy stance through 2024.

 Moody's noted that the vigilance of these central banks is driven by the potential for upside inflation risks resulting from tight labor markets and resilient demand. It concluded that, despite relatively robust economic activity throughout the year, elevated core inflation means central banks cannot be certain they have fully achieved their inflation mandates at this time.