Turkey's economic growth is increasingly hampered by negative net exports, while domestic demand, though softening, remains the primary driver. Persistent inflation, projected to be close to 30% this year, necessitates a sustained period of tight monetary policy. Elevated borrowing costs and stricter loan growth caps are expected to lead to a more marked economic slowdown in the second half of the year, with annual GDP growth anticipated around 3%.
The current account deficit widened significantly in March, with financing relying more on official reserves. While May inflation showed no clear sign of disinflation, the Central Bank continues its efforts to stabilize the currency and anchor inflation expectations. The outlook suggests a prolonged period of restrictive policy, with potential upward adjustments to interest rates amid ongoing geopolitical and domestic uncertainties.
