The European Bank for Reconstruction and Development (EBRD) has upgraded the 2022 GDP growth forecast for Turkey due to more-robust-than-expected domestic demand and a modest recovery in exports, in its latest Regional Economic Prospects Report.
Accordingly, GDP growth in Turkey is expected at 4.5 percent in 2022, compared to 2.5 percent in the previous report in May this year, supported by government spending ahead of the planned elections and better-than-expected net exports, reflecting in part increased exports to Russia. The GDP growth forecast for the country for 2023 is unchanged at 3.5 percent.
The report highlights that economic activity remained relatively robust, while the rapid loss in value of the Turkish lira and rampant inflation remain key vulnerabilities.
Turkey’s widening current account deficit and short-term external debt, which stands at $180 billion, also remain significant concerns in terms of reserves, which currently stand at around $15 billion.
The Bank stated that the global downturn risks such as geopolitical tensions and aggressive monetary tightening in developed countries also risk affecting Turkey’s GDP growth.