Key Takeaways

• According to the World Bank, Turkey's Gross Domestic Product was worth $815.27 billion in 2021. However, the Turkish Statistical Institute estimated Turkey's GDP to be $803 billion (7.3 trillion TRY) in 2021. The country's GDP per capita was $9,539 (85,672 TRY).
• According to the latest data, Turkey's inflation rate was 84.4% in November. This was a decrease from the 85.5% that was reported in October.
• In November 2022, the Central Bank of Turkey reduced its interest rate to 9 percent from the previous 10.5 percent. The bank indicated that it will "end its current rate-cutting cycle." 

Introduction

GDP and Growth Rate

• According to the World Bank, Turkey's Gross Domestic Product was worth $815.27 billion in 2021. However, the Turkish Statistical Institute estimated Turkey's GDP to be $803 billion (7.3 trillion TRY) in 2021. The country's GDP per capita was $9,539 (85,672 TRY).

 

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• The 2021 GDP represented a growth of 11 percent compared with data from 2020.
• Turkey's GDP average annual growth rate is estimated to be 4.82% from 1999 to 2022. The country's GDP annual growth reached "an all-time high of 22.20 percent in the second quarter of 2021 and a record low of -14.50 percent in the first quarter of 2009."
• Turkey's GDP in 2022 is expected to grow by 5.5% (Goldman Sachs estimate). According to the Turkish government's Medium Term Programme, the country's economy is expected to grow by 5.3% from 2022 to 2025.

Inflation Rates

• According to the latest data, Turkey's inflation rate was 84.4% in November. This was a decrease from the 85.5% that was reported in October.
• In October 2022, Turkey reported the highest inflation rate in 24 years (since 1998). According to Reuters, the depreciation of Turkey's currency and high energy prices were the primary cause of rising inflation in the country.

 

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• In 2021, Turkey's currency, the lira, declined by 44 percent. The lira has also declined by 29 percent in 2022.
• A weak lira raises prices in the country by making imports expensive. This also affects the costs of inputs. However, a weaker lira encourages exports and positive trade by making Turkish commodities cheaper for importing countries.
• Experts project that the inflation rate in Turkey will reduce as global prices decrease. For instance, PwC projects that the inflation rate in Turkey will fall to 15.2% by 2027.

Interest Rates

• In November 2022, the Central Bank of Turkey reduced its interest rate to 9 percent from the previous 10.5 percent. The bank indicated that it will "end its current rate-cutting cycle." 

 

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• According to data provided by the Organisation for Economic Co-operation and Development (OECD), commercial loan rates in the country are about an average of 18 percent, while rates for consumption loans are above 30 percent. 
• The interest rate set by the central banks affects rates "offered by commercial banks, affecting the cost of repaying loans and mortgages, as well as the interest returned to people who deposit their cash in a bank." High-interest rates increase borrowing prices, reduce demand, and also reduce prices.
• Experts project that the inflation rate in Turkey will reduce as global prices decrease, "which will accordingly take the pressure off the central bank to hike interest rates." 

Research Strategy