World Economy:

At the beginning of 2022, with regard to the world economy, it was expected that the problems caused by the pandemic, especially the supply chains, would gradually decrease and global growth would gain momentum once again, yet the war between Russia and Ukraine at the end of February led to new geopolitical risks to arise. In this context, rising food, energy, and commodity prices and the resulting inflation, reaching all-time highs in both developed and developing countries, especially the FED and ECB’s monetary tightening as a means of fighting inflation and the increase in interest rates, and finally, the Chinese government’s application of strict quarantine measures within the framework of the zero Covid-19 case policy stand out as developments that may have negative impacts on global growth and foreign trade.

As a result of such risks, we observe the beginning of the slowdown of the global economy and trade activity as of the second half of the year. The World Economic Outlook Report published by the IMF in April included the expectations for a decrease in the global growth rate to 3.6 percent in 2021, which was 6 percent in 2021. However, due to the slowdown signals observed in the leading indicators in the second half of the year, the IMF revised its 2022 growth expectation downwards to 3.2 percent in the October version of the report and announced its 2023 growth expectation as 2.7 percent. On top of the decrease mentioned above in global growth rates, the IMF also predicts that global inflation will remain high. Being 4.7 percent in 2021, the global inflation rate is expected to rise to 8.8 percent in 2022, fall to 6.5 percent in 2023, and decline to 4.1 percent in 2024.

In summary, an economic outlook will prevail in the upcoming period, where global growth will slow down and inflation will remain above the desired level.

Turkish Economy:


After a strong growth performance of 11.4 percent in 2021, the Turkish economy entered 2022 in a way that will positively differentiate from the world economies and grew by 7.5 percent and 7.7 percent, respectively, in the first two quarters of the year. Then, due to the shrinkage in the global economy, especially in our main export markets, the third quarter growth rate declined to 3.9 percent. Thus, after the second quarter of 2020, when the epidemic was experienced most severely, it has grown for 9 consecutive quarters.

The subdetails as well as the size of the growth showed a pleasing development in this period. Household consump- tion, net exports and investment items all contributed to growth in a positive manner.

Since the second half of the year, the slowdown signals observed in countries around the world gradually started to affect the Turkish economy as well. In this context, the PMI Index, one of the most significant leading indicators, was above 50 for the last time in February, staying below the threshold of 50 for 8 months.

However, despite this indicator, even though the growth rate slows down a bit, it is expected to result above the annual target of 5 percent. In 2023, the contraction in our export markets will serve as a risk factor for growth. On the other hand, the strong investment need for green transformation and digital transformation will also encourage growth through investment expenditures. Under the buoyancy in domestic demand, the growth is expected to be around 5 percent in 2023.


At the beginning of 2022, the rate of in

crease in our exports was
around 20 percent com-
pared to the same period
of the previous year. However,
the contraction observed in global
markets, particularly the slowdown in
European countries, where we export about
half of our exports, has also brought the growth rate of our exports down. Despite the decrease in the rate of increase in our exports to 15 percent as of October, our total exports reached USD 210 billion in the first 10 months, and the

year-end target of USD
255 billion is consid-
ered to be attainable.
The fact that we main-
tained production without allowing the deterioration in supply chains, even in the course of the pandemic, has been a significant factor in the increase of our export ca- pacity. In 2022, we have maintained this advantage and besides, our policy of balance in foreign policy during the Russia-Ukraine war has rendered Türkiye a centre of attraction for many countries.

Our exports are expected to rise to USD 265 billion in 2023, despite the challenging nature of the current global conjuncture. The biggest risk for us in this process will be the economic slowdown in Europe. In addition, the import restrictions that Iran has taken against international sanctions may adversely affect our exports to this country. Besides, the positive reflection of our recent bilateral political relations with countries close to us geography-wise, such as the United Arab Emirates, Saudi Arabia, and Egypt, on our trade relations may be considered as an opportunity for our exports.

The increase in global energy and raw material prices since February led to an increase in global inflation, as well as an increase in the import prices and current account deficit for Türkiye.

The increase in the price of oil which was USD 70 in 2021 to USD 102 in 2022 is considered the most significant reason for our energy imports to increase from USD 50 billion in 2021 to over USD 100 billion in 2022. Such an increase in energy prices led to the expectation that the foreign trade deficit, which was USD 46 billion in 2021, will exceed USD 100 billion in 2022. Having begun to recover following the pandemic, the tourism sector’s positive performance in 2022 resulted in the expectation that USD 35 billion of travel income will be achieved in 2022. Concordantly, the ratio of current account deficit to GDP is expected to be close to 6 percent in 2022. In 2023, a more balanced outlook is expected in terms of external balance. Besides the increase in exports, raw material and energy prices are expected to decrease compared to 2022 due to global recession concerns, which is expected to result in a decrease in our energy imports and thus our total imports. As a result of the continuation of the recovery in tourism in 2023, the decrease in our imports and our export performance, the current account deficit is ex- pected to decrease by half and approach 3 percent in 2023.


Inflation was the most negative indicator in the economic report of 2022. Not to mention the rising energy and raw material prices at the global scale, annual inflation rose to 85 percent as of the end of October due to the unhealthy price formations observed in the foreign exchange markets. Inflation is expected to decrease as of December and drop below 50 percent until April 2023 and approach 30 percent at the end of the year. In this process, the decline in global energy and raw material prices and the stabilization of domestic exchange rate prices will play a significant role.


Despite the increasing cost inflation and stagnation expectations around the world, the growth of the Turkish economy is expected to be around 5 percent in 2022 and 2023. Domestic demand will still be standing at the forefront of this growth and the stagnation in foreign markets will have a negative impact on export to a certain extent. It would be a correct export strategy to focus on rich and large economies such as Asia-Pacific countries and the USA and Canada in the Americas, instead of European countries where the recession will be felt intensely. Besides, the normalization of our political relations with Egypt, the United Arab Emirates, Saudi Arabia and, in the longer term, Syria, which is located close to us geography-wise, will also have a positive effect on our foreign trade performance. In conclusion, inflation is expected to decline as a result of the downward pressure on commodity and energy prices caused by the global recession, and the stabilization of domestic exchange rates.

Dr. Hakkı Karataş/Director of Economic Research and Chief Economist at DEİK