By Justin Mays:
Turkey's economy outpaced its G-20 peers during the fourth quarter of 2021, with 11% growth 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, to increase. At the same time, 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 its 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.