ECONOMIC OUTLOOK FOR 2024 AND EXPECTATIONS FOR 2025

In 2025, aligned with our targets for sustainable growth and export-driven development, we will keep working to position Türkiye as a global trade hub

Global Outlook: In 2024, the global economy commenced with substantial pressure from elevated inflation rates. Increasing interest rates in advanced economies like the United States and the European Union (EU) have sparked worries about a worldwide economic downturn. Furthermore, the persistent Russia-Ukraine conflict and geopolitical uncertainties in the Middle East have restrained the global appetite for risk. The comparatively robust performance of the US economy, the decrease in energy prices, and China’s incentive-driven recovery initiatives have resulted in economic activity maintaining a generally steady course. In the Eurozone, a deceleration in manufacturing prompted the European Central Bank to begin lowering interest rates around mid-year. Meanwhile, the US Federal Reserve has been more prudent about cutting interest rates.

Although China is trying to rebound through increased domestic consumption, rising exports, and various policy measures, its growth remains below expectations. Even though commodity prices are declining, global inflation is receding only gradually due to persistent service prices, making the disinflation phase more challenging. The IMF anticipates a 3.2 percent expansion of the global economy in 2024.

This growth is expected to be stronger in emerging nations, whereas developed economies—apart from the United States—are not showing robust performance. Following a drop in goods and services trade growth below 1 percent in 2023, it is expected to exceed 3 percent in 2024. Additionally, environmentally friendly products are taking the spotlight in trade, driven by the push toward a green economy.

Approaching 2025, we see that efforts to combat global inflation have achieved limited success. This development is likely to enable incremental interest rate cuts and looser financial conditions. Nonetheless, a second Trump administration’s potential “America First” strategy, featuring additional import tariffs, could dampen global trade. Türkiye’s Economy: Throughout 2024, Türkiye’s economic agenda was dominated by efforts to tackle inflation. Building on the disinflation program launched in mid-2023, the country maintained a strict monetary policy and fiscal discipline over the year. Under these measures, the Central Bank bolstered its reserves, pursued a stable exchange rate policy, and upheld fiscal discipline except for earthquake-related spending.

As a result, Türkiye adopted a growth strategy that shifted the emphasis from domestic consumption to exports. Despite notable progress in reducing overall inflation, services inflation declined more gradually than in the goods market. The consumer price index, which stood at about 65 percent at the end of 2023, fell to 44.38 by the close of 2024. Yet the drop in headline inflation has been insufficient to notably improve expectations. Türkiye’s economy grew by a robust 5.3 percent in the first quarter of 2024, then slowed to 2.4 percent in the second quarter and 2.1 percent in the third quarter.

By year-end, growth is anticipated to settle at around 2.9 percent. At the same time, there are indications of a more balanced structure in overall growth. Household consumption has decelerated markedly, whereas investment spending has been declining since the final quarter of 2023. While exports of goods and services remain a driver of growth, their impact is waning due to both global and domestic cost pressures. Notably, the industrial sector has posted negative growth for two consecutive quarters, highlighting the need for targeted support measures. In external trade, a modest rise in exports coupled with a drop in imports led to a marked narrowing of the foreign trade deficit. By the end of November 2024, exports had increased by 2.3 percent to USD 261.4 billion, while imports declined by 6.8 percent to USD 340.7 billion. Consequently, the foreign trade deficit shrank by 27.9 percent to USD 79.3 billion. This development helped bring the current account deficit below 1 percent of GDP.

Türkiye’s enhanced credit rating benefited from lower risk premiums and higher Central Bank reserves. In 2024, Türkiye’s distinction as the only country whose credit rating was raised by all three major rating agencies marks a noteworthy success and help bolster economic activity. From the second half of the year onward, the effect of real-sector support on economic activity will become more pronounced. Taking advantage of the export potential for eco-friendly technologies and sustainable products as part of the transition to a green economy represents a crucial opportunity for Türkiye. To help the industrial sector regain momentum, accelerating technology investments and digitalization, along with fostering value-added production, remains vital. At DEİK, as we carry on with our business diplomacy initiatives, we keep a close eye on developments both in Türkiye and worldwide.

In 2025, aligned with our targets for sustainable growth and export-driven development, we will keep working to position Türkiye as a global trade hub. One of our biggest wishes for the new year is for the suffering of innocent civilians in Palestine to come to an end and for lasting peace to be established in the region. We hope 2025 will be a more peaceful and stable year for our country and for the world.

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