Turkish economy to post 5% growth for 2022, 2023: Nebati
Thanks to its new economy model, Türkiye foresees economic growth of 5% in 2022 despite a global slowdown, challenges and the expectation of recession in many parts of the world, the finance minister said, adding that this moderate growth will continue in 2023
THE LEADING indicators of the economy for the second half of 2022 point to moderate growth and Türkiye’s gross domestic product to grow 5% in 2022, amid a global slowdown, Treasury and Finance Minister Nureddin Nebati said yesterday.
Speaking to Parliament’s Planning and Budget Committee, Nebati said the economic growth, expected to maintain its balanced outlook in 2023, is targeted to be 5% again next year.
“In a period when challenging global conditions are experienced and the global conjuncture is changing rapidly, the ‘Türkiye Economy Model’ aims to ensure macroeconomic and financial stability and price stability simultaneously, to encourage high value-added production, to turn the change in supply chains into an opportunity and to permanently solve the current account deficit problem,” Nebati reiterated.
Stating that a significant improvement was achieved in the non-energy current account balance, significant gains were achieved in investment, employment, production and exports, Nebati said, “In this period when the risk of recession has increased for many developed and developing countries, the Turkish economy continues to grow strongly thanks to our model, and the composition of the growth also displays a balanced outlook.”
“Türkiye is the fastest growing country in the G-20 with a GDP growth of 11.4% in 2021 and recorded the highest growth rate in the last 50 years,” he said.
Nebati noted that some 6.6 points of this growth come from domestic demand and 4.8 points from net foreign demand and the net foreign demand to growth is the highest figure reached after 2001.
“Despite the uncertainty caused by the war between Russia and Ukraine and the weakening global economy, our gross domestic product grew by 7.5% in real terms in the first half of 2022,” he said, noting: “With a growth rate of 7.6% as of the second quarter, Turkey was among the fastest growing countries in the OECD. In the first half of the year, our economy maintained its balanced outlook in line with our sustainable and healthy growth target.”
Goldman Sachs and Moody’s have also raised recently their forecast for Türkiye’s 2022 economic growth. Goldman Sachs said it revised upward its GDP growth forecast for Türkiye for this year to 5.5% from 3.5% while lifting its 2022 current account deficit forecast to $45 billion from $36 billion. Moody’s also said in a report in September that it raised its 2022 growth estimate to 4.5%, up from 3.5%.
Nebati further commented that total employment in the country rose above the pre-pandemic period and reached historically high levels.
Emphasizing that exports continue to break historical records, Nebati stated that with the steps taken within the scope of the Turkish Economy Model, exporters succeeded in turning the disruptions in the global supply chain into opportunities and made exports the locomotive of growth.
“Our exports broke a record in every month of 2022 and reached the highest level in the history of the republic, exceeding the annualized $253 billion in October.”
Nebati stated that total imports increased with energy imports, which remained high due to rising global energy prices.
Pointing out that tourism has grown at a rate above the world average and outperformed its pre-pandemic levels, Nebati noted that they expect the course of tourism to continue for the rest of the year and a performance well above the record revenue in 2019.
Nebati said, “While the current account balance gives a deficit due to energy imports, the current account balance excluding energy continues to have a surplus.”
Nebati stated that the country aims to permanently improve the current account balance in the medium and long term with the policies implemented.
Apart from the investments made in the renewables sector, the country aims to reduce foreign dependency on energy and to further reduce the pressure on the current account balance and external financing needs by commissioning the natural gas discovered in the Black Sea by 2023, he added.
Speaking on the fight against inflation, Nebati stated that they gave up TL 276.8 billion ($14.89 billion) of tax revenue this year as part of this.
Drawing attention to the tax cuts aimed at increasing the purchasing power and welfare of the citizens, Nebati said that they also support the most basic expenditures of the citizens. Reminding that they provide an 80% subsidy for natural gas used in households and 50% subsidies for electricity, Nebati said, “We provide electricity consumption support up to 150 kilowatt-hours to 2.1 million households. Our target is to increase this support to 4 million households.”