BBVA Research Projects Turkey's H1 2024 Growth at 2.5%

BBVA Research projects that Turkey's economy will register 2.5% growth in the first half of 2024.

Growth Outlook for H1

The 2.5% growth forecast aligns with the latest quarterly data, yet sits below the 3.2% average annual growth recorded previously. The modest slowdown reflects a softening in external demand and export performance.

Policy Framework and Interest‑Rate Dynamics

■The Central Bank’s 8.5% real policy rate is set on a gradual easing path to sustain the growth target.

■Inflation expectations hover around 15%, underscoring the need for continued monetary tightening.

■Exchange‑rate volatility remains limited, with a 3% depreciation year‑to‑date.

SME Lending and Liquidity Snapshot

SME loan volumes continue to contract, shrinking 4.2% compared with the previous quarter. Nevertheless, bank liquidity ratios hold steady at 12.8%, indicating no immediate systemic strain.

Market Reactions and Risk Landscape

■Equity indices responded positively, climbing 6.7% after the growth projection.

■Investor confidence index rose to 62, up 5 points from the prior period.

■Key risks include global interest‑rate hikes and volatile energy prices, which could pressure the outlook for the second half.

Kerem Tufan – Director of Commercial Credit and Central Bank Policies

The 2.5% growth estimate from BBVA should be read as a product of ongoing monetary tightening and the persistent SME credit squeeze. Healthy liquidity metrics suggest the banking sector remains resilient to shocks. However, sustained external pressures and inflationary forces may compel a reassessment of growth targets for the upcoming quarter.