In critical condition finds the economy of the country the current political turmoil in Turkey Starting from the arrest and subsequent condemnation of the Mayor of Constantinople, Imoglou.
According to a report by the Greek Embassy’s Economic and Commercial Affairs Office in Ankara, according to an OECD report (publication 04.12.
Similarly, the OECD provides that monetary policy tightening and ongoing fiscal consolidation will limit the consumption of households, while investment and government costs will slow down as the impact of rebuilding by the devastating earthquake of February 20.
However, exports are expected to increase due to the improvement of the business environment and the continued rejuvenation of international tourism. Further, according to the OECD report, GDP growth rate is expected to recover in 2026, which, according to forecasts, will amount to 4%, as the impact of stabilizing political stabilization will be moderate.
In addition, according to the OECD report, the implementation of contracted fiscal and monetary policy should be continued until inflation is divergent in a trajectory of achievement of the goal of the T/Government.
In this context, it is noted that high expectations for inflation maintain the risks of non -decline, despite the continued attempt to retention the general price level.
However, structural reforms may further support the current economic staff’s efforts to stabilize the macroeconomic framework and to enhance the country’s long -term growth potential.
In this context, the Turkish government published its medium -term program, confirming the commitment to reduce the general deficit of the public sector from 5.6% in 2023 to 2.6% in 2026.
Specifically, according to the OECD report, the Turkish economy is presenting samples of deceleration, and in this light, the annual GDP increase in the first quarter decreases from 5.3% to 2.5% in the second quarter.
According to the OECD analysis, important indicators, such as using the production capacity of manufacturing, demand for services, coupled with the continuing shrinkage of business loans, demonstrate that economic activity can further slow down. Although inflation as early as September TE It has decreased below 50%, remains high mainly due to rising prices in services and in a series of goods.
In terms of Turkey’s current account balance, according to the OECD report, it is expected to improve it, mainly due to the positive prospects of tourism, but the increase in natural gas production in the Sakarya deposit.
As for the country’s exports, the Turkish government’s effort to boost exports is expected to further yield and improve the current account balance, although exports have been stagnant since the beginning of the year, mainly due to the escalation of regional tensions and seasonal tensions.
Regarding Turkey’s monetary policy, the OECD report states that the country’s central bank is implementing strict monetary policy with its primary objective of price stability, maintaining the key interest rate at 50% and using all the tools available to achieve its goal, such as a monthly increase in a monthly increase.
According to OECD forecasts, the country’s inflation, on an annual basis, is expected to reach 30.7% for 2025 and retreat to 17.2 in 2026.
Finally, according to the OECD proposals, regarding the enhancement of the country’s macroeconomic situation, it is noted that Turkey must continue to implement strict monetary and fiscal policy until the intelligence target is achieved in order to enhance the confidence of markets.
At the same time, it is proposed a set of structural reforms in the labor market by making employment contracts more flexible, ensuring that minimum wages are possible for businesses.
General elements
According to the annual report of the Greek Embassy’s Economic and Commercial Affairs Office in Ankara, Turkey:
- It ranks 17th in size, economy internationally and 33rd in facilitating business development (data: World Bank).
- It is one of the OECD members, which were rapidly developed during the 20-year 2000-2021, marking an average annual rate of 6% per capita income (OECD report, 2022, current prices and purchasing power).
In 2024, Turkey’s economy improves its evaluation by the three main international credit ratings.
Specifically, Fitch has increased Turkey’s evaluation from B+ to BB- with a steady perspective due to the improvement of external reserves and the expected gradual decline in inflation.
In addition, Moody’s improved its B3 to B1 assessment, which happened for the first time in 11 years, while S&P Global increased the B+evaluation.
Turkey’s development in 2023 was based on two factors:
- In the positive export performance, mainly to the European market, which is the largest trading partner (40% of Turkish exports are directed to the EU).
- Increasing the costs of enduring consumer goods, in an inflationary environment, with negative interest rates (households have paid increased costs to protect the value of savings) and acute living costs.
It is noted that despite the challenges of government policies, international inflationary pressures and the war in Ukraine, the Turkish private sector has shown durability and ability to adapt, especially in the context of the shift of global supply chains.
In 2023, the current account deficit remains high to $ 45 billion, although it was reduced compared to 2022, which amounted to $ 48.7 billion.
The fiscal deficit amounted to 5.2% of GDP for 2023, mainly due to the need to pursue an expansionist fiscal policy to repair the damage resulting from the devastating earthquake of February 2023.
It should be noted that the cost of losses, according to US Embassy estimates in Ankara, will amount to $ 150 billion.
Investment
Since 2003, the country has become an important ASE destination internationally, which is attributed to the favorable international environment of the period, to the implementation of the Customs Union Agreement with the EU. and the launch of accession negotiations with the EU In 2005. In 2003 – 2023 it is estimated that Turkey has attracted a total of approximately $ 262.2 billion in total. 72.3% comes from the EU and 18.1% from Asia.
Turkey remains an attractive destination for foreign investors because of its industrial base, educated workforce and proximity to markets.
The Turkish regime for the FDI is liberal with minimal restrictions on sector and nationality.
According to Turkey’s Central Bank, foreign foreign investments were recorded in the country in 2023, compared to $ 13.7 billion in 2022, down 22.7% compared to 2023, however, most of them consisted of acquisition of real estate and equity inflows.
Turkey needs more inputs in manufacturing, services and agriculture to adapt to fundamental changes, such as green agreement and digitization.
However, high inflation rate, coupled with increasing debt levels, has harmed the country’s image as a favorable CAI destination. The ongoing brain leak also doubts whether demographics and relatively well -trained workforce will continue to be an advantage for the country’s competitiveness to attract foreign investment.
The most important country of origin of FDI remains the Netherlands over time, with a total of 32.3 billion invested capital and 18% of all FDIs in the country. The first five of the countries in 2023 were completed by Germany, Spain, the United Kingdom and Switzerland.
According to data from the Central Bank of Greece, in 2023, T/AE Stock in Greece amounts to $ 444 million, while E/AE Stock in Turkey amounts to $ 339 million.
GREEK – Turkish economic relations
Bilateral trade has been characterized by the dominant participation (50% – 70%) of oil/fuel refining products and electricity in the composition of Greek exports and the increasing expansion of the Turkish export mixture. For a decade, since 2009, the two countries’ trade balance has been surplus in favor of Greece (with the exception of 2016).
In 2023, Greek exports decreased by 27.38%, mainly due to the significant reduction in oil exports, which fell by 49.2% compared to 2022, which amounted to EUR 570 million versus EUR 1.17 billion in 2022.
Correspondingly, the oil -extracted oils in Greece increased by 40.7% in 2023 compared to 2022 and amounted to EUR 242 million in 2023, compared to EUR 172 million in 2022.
It should be noted that the operation of the STAR refinery in Smyrna -investment of the Azeri state -owned Socar company, as well as corresponding investments, which are rapidly implemented in other areas of Turkey, is expected to substantially replace Greek oil exports in the coming years.
In 2023, the trade balance was deteriorated and was for Greece with a deficit of EUR 907 million, compared to EUR 389 million in 2022, a development mainly due to the reduction of oil exports (-49%).