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In brief
Recep Tayyip Erdogan won the presidency in May 2023, extending his 20 years in power. EIU expects MrErdogan to continue to make most decisions himself, meaning that foreign and economic policy will remain unpredictable. However, a gradual return towards more rational economic policies is under way, which will reassure investors after nearly two years of irrational policymaking. We expect a managed depreciation of the Turkish lira against the USdollar towards a level closer to fair value in 2024-28. Turkey is embroiled in regional conflicts, and relations with the West can be confrontational. However, Turkey will continue to pursue a pragmatic and transactionalrelationship with the West. Turkey has large external financing needs, and its private sector is heavily indebted in foreign currency, raising risks to financial stability. High inflation, still partially unorthodox economic policy and weakening external demand will constrain real GDP growth in 2024, but growth will remain relatively firm in 2025-28.
Read more: What to watch in 2024: Turkey hobbling towards stability
Read more: Turkey's monetary policy is still not "back to normal"
Featured analysis
Improving performers in EIU’s business environment index have consistently gone on to see faster per-head growth.
The 2024 US presidential election will be a major determinant of how the agreement moves forward.
Growing war fatigue and financial uncertainty will persist this year.
Economic growth
| (% unless otherwise indicated) | |||
| 2023 | 2024 | 2025 | |
|---|---|---|---|
| US GDP | 2.5 | 2.2 | 1.5 |
| Developed economies GDP | 1.6 | 1.5 | 1.6 |
| World GDP | 2.6 | 2.5 | 2.6 |
| World trade | -0.9 | 2.8 | 3.5 |
| Source: The Economist Intelligence Unit | |||
Expenditure on GDP
(% real change)
= 2024
= 2025
Private consumption
Government consumption
Gross fixed investment
Exports of goods & services
Imports of goods & services
Source: The Economist Intelligence Unit
Forecast updates
Capital inflows were weak, and official foreign-exchange reserves declined.
Israeli-Turkish relations will remain poor in the short term, but we do not expect diplomatic ties to be cut.
Downside risks include a change in the administration's commitment to tight fiscal, incomes and monetary policies.
Quick links
Origin of GDP
(% real change)
= 2024
= 2025
Agriculture
Industry
Services
Source: The Economist Intelligence Unit
