Economic Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Growth rebounded strongly from the initial impact of the pandemic, reflecting a dynamic private sector and stimulative policies, the country being among the few countries not to dive into recession. Turkey’s growth was buoyant in the first half of 2022 (7.5% year-on-year) driven by sustained private consumption and a recovery in tourism. However, investment activity has been subdued and macroeconomic imbalances have risen, resulting in an overall yearly growth rate of 5% according to the IMF. Economic growth is projected to decelerate to around 3% per annum in 2023 and 2024 amid weaker external demand, persistent geopolitical uncertainties, and slower household consumption in light of rising inflation and the erosion of purchasing power.
Fiscal policy remained supportive in 2022, with the country increasing its budget deficit to 5.9% (from 5.1% one year earlier – IMF) following the approval of several measures for energy consumers and ambitious state-subsidised social housing projects. The IMF expects the deficit to widen over the forecast horizon, to 6.5% this year and 6.6% the next, partly due to the global stagnation resulting from the impacts of the war in Ukraine which are expected to worsen the current account deficit. In 2022, the public debt-to-GDP ratio decreased to 37.5% from 41.8% but should follow an upward trend in 2023 (37.7%) and 2024 (39.6% - IMF). The debt level is still low, although the short-term foreign debt stock totalled USD 138.1 billion as of the end of August 2022 (up by 13.6% from end-2021). Despite high inflation – the rate skyrocketed to 73.1% in 2022 due to increased energy bill and higher cost of imports due to the depreciation of the Turkish lira - the central bank has reduced its base rate several times, to the current level of 9% as of January 2023, making Turkey being the only OECD country to have lowered policy interest rates during the year. Hence, the inflation rate is forecast to remain high in 2023 (51.2%) reflecting a gradual pass-through of the recent lira depreciation and wage increases to consumer prices, before easing slightly the following year (24.2% - IMF). By the end of 2022, the IMF recommended early policy rate hikes accompanied by moves to strengthen the central bank’s independence.
According to IMF estimates, employment partially recovered along with the rebound in economic activity, hence the unemployment rate decreased to 10.8% in 2022 and is forecast to stabilize at around 10.5% over the projected period. In an effort to contrast the erosion of households’ purchasing power, the minimum wage was raised by 30% in July 2022, six months after a 50% increase. A further 55% increase was announced for 2023. Market conditions remain challenging, particularly among females and the youth. Wage inequality and the size of the informal sector remain long-standing problems. In 2022, the IMF estimated the country’s GDP per capita (PPP) at USD 38,759, 28.1% below the EU average.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 720.11 | 817.51 | 905.53 | 1,029.30 | 1,087.05 |
| GDP (Constant Prices, Annual % Change) | 1.9 | 11.4 | 5.6 | 2.7 | 3.6 |
| GDP per Capita (USD) | 8,612 | 9,654 | 10,618 | 11,932 | 12,461 |
| General Government Balance (in % of GDP) | -5.0 | -5.2 | -3.1 | -5.7 | -6.1 |
| General Government Gross Debt (in % of GDP) | 39.7 | 41.8 | 31.2 | 35.0 | 36.7 |
| Inflation Rate (%) | 12.3 | 19.6 | 72.3 | 50.6 | 35.2 |
| Unemployment Rate (% of the Labour Force) | 13.1 | 12.0 | 10.5 | 11.0 | 10.5 |
| Current Account (billions USD) | -31.89 | -7.23 | -48.73 | -40.74 | -34.54 |
| Current Account (in % of GDP) | -4.4 | -0.9 | -5.4 | -4.0 | -3.2 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
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