Ankara, September 2 (FFN) – Turkey’s economic growth in the second quarter of 2024 slowed more than anticipated, marking the slowest pace since the economic downturn four years ago. This slowdown is primarily attributed to a year of aggressive monetary tightening by the Central Bank of Turkey, according to data released by the Turkish Statistical Institute (TUIK) source.
Key Economic Indicators
| Indicator | Q1 2024 (Revised) | Q2 2024 | Expected Q2 2024 |
|---|---|---|---|
| GDP Growth (YoY) | 5.3% | 2.5% | 3.2% |
| Consumer Spending Growth | 6.8% | 1.6% | – |
| Government Spending Growth | 5.4% | 0.7% | – |
| Gross Capital Formation | 9.3% | 0.5% | – |
| Exports Growth | 4.3% | 0.0% | – |
| Imports Growth | -3.0% | -5.7% | – |
The Gross Domestic Product (GDP) rose by 2.5% year-on-year in Q2 2024, down from a revised 5.3% in the previous quarter, significantly below the 3.2% growth expected by analysts source.
Household spending growth sharply decelerated to 1.6% from 6.8% in Q1 2024, as higher borrowing costs significantly weakened consumer purchasing power.
Government expenditure growth also slowed, rising by only 0.7% compared to 5.4% in the first quarter, as public spending was reduced to control public finances.
Gross capital formation grew by just 0.5%, down from 9.3% in Q1, while exports stalled (compared to a 4.3% increase in the previous quarter) and imports fell by 5.7% (down from -3% in Q1).
In quarter-on-quarter terms, and after adjusting for seasonal and calendar effects, GDP increased by only 0.1% from April to June, following a 1.4% rise in the first three months of the year.
Monetary Policy and Inflation
| Indicator | Value |
|---|---|
| Central Bank Key Interest Rate | Increased to 50% from 8.5% |
| Inflation (May 2024) | 75% |
| Inflation (July 2024) | Below 62% |
The Central Bank of Turkey has raised its key interest rate to 50% from 8.5% since June of last year to cool inflation, which peaked at 75% in May but fell below 62% in July and is expected to continue declining source.
The International Monetary Fund (IMF) forecasts Turkey’s economy to grow by 3.2% in 2024 and 3.3% in 2025.
