IMF raises growth forecast for Turkiye to 5%

The International Monetary Fund (IMF), while maintaining its global economic growth expectation for this year as 3.2%, lowered its forecast for the next year from 2.9% to 2.7%. The growth expectation of the Turkish economy for this year has been increased from 4% to 5%.

The IMF published the October issue of the World Economic Outlook Report with the title “Combating the Livelihood Crisis”.

Emphasizing that the global economy is experiencing a series of turbulent difficulties, the report emphasized that high inflation, tightening financial conditions in most regions, Russia’s war in Ukraine and the COVID-19 epidemic put heavy pressure on the economic outlook.

In the report, it was stated that the normalization of monetary and fiscal policies, which provided unprecedented support during the epidemic in order to reduce inflation to the target, cooled demand, and it was stated that a growing part of the economies is in a slowdown in growth or in a complete contraction.

“The future health of the global economy is critically dependent on the successful adjustment of monetary policy, the course of the war in Ukraine, and the possibility of further epidemic-related supply-side disruptions such as in China,” the IMF report said.

“Weakest growth profile since 2001”

Reminding that the world economy grew by 6% last year, the report said that the global economy is expected to grow by 3.2% this year and 2.7% next year.

In its report published in July, the IMF predicted that the global economy would grow by 3.2% in 2022 and 2.9% in 2023.

“This is the weakest growth profile since 2001, excluding the global financial crisis and the acute phase of the COVID-19 pandemic, and reflects significant slowdowns for the largest economies,” the report said.

In the report, which stated that approximately one third of the world economy is facing negative growth for two consecutive quarters, it was noted that global inflation is expected to rise to 8.8% in 2022 from 4.7% in 2021. It is estimated that it will decrease to 6.5% in 2023 and to 4.1% in 2024.

The report emphasized that risks to the economic outlook remain unusually large and to the downside.

Turkiye’s growth forecast for this year has been raised

In the IMF’s report, the updated growth forecasts of the countries were also shared.

Accordingly, it is estimated that the Turkish economy will grow by 5% this year and 3% next year.

In the report published by the IMF in July, it was predicted that the Turkish economy would grow by 4% in 2022 and 3.5% in 2023.

In the report, while the 2022 annual inflation expectation for Turkiye is 73.1%, it is estimated that the inflation will decrease to 51.2%in 2023.​​​

Other organizations that have increased Turkiye’s growth expectations are as follows:

S&P old forecast: 3.5%, new forecast 5.2%

EBRD old forecast: 2%, new forecast 4.5%

OECD old forecast 3.7%, new forecast 5.4%

Goldman Sachs old forecast: 3.5%, new forecast 5.5%

Fitch Ratings old estimate: 4.5%, new estimate 5.2%

Moody’s old forecast: 3.5%, new forecast 4.5%

World Bank old forecast: 2.3%, new forecast 4.7%

Downward revision in US economic growth prospects for 2022

The growth expectation of the US economy for 2022, which contracted in the first half of this year, was reduced from 2.3% to 1.6%. The 2023 growth forecast of the country’s economy was maintained as 1%.

While the growth forecast of the Euro Zone economy for this year was increased from 2.6% to 3.1%, the forecast for 2023 was reduced from 1.2% to 0.5%.

One of Europe’s leading economies, Germany’s 2022 growth forecast was increased from 1.2% to 1.5%, and France’s from 2.3% to 2.5%. Italy’s increased from 3% to 3.2% and Spain’s from 4% to 4.3%.

While the economies of Germany and Italy are expected to contract by 0.3% and 0.2%, respectively, next year, the growth expectations for the next year were lowered from 1% to 0.7% for France, and for Spain, it was reduced from 2% to 1.2%.

While the UK’s 2022 growth forecast was increased from 3.2% to 3.6%, the 2023 expectation was reduced from 0.5% to 0.3%.

With these revisions, the growth expectation for the developed countries group was reduced from 2.5% to 2.4% for 2022, and from 1.4% to 1.1% for 2023.

Decline in Chinese economy’s growth forecasts

In the emerging markets and developing country economies group, China’s economic growth expectation for this year was reduced from 3.3% to 3.2%. The 2023 growth forecast of the Chinese economy was also reduced from 4.6% to 4.4%.

While the growth expectation of the Indian economy for this year was reduced from 7.4% to 6.8%, the growth forecast for the next year was left unchanged at 6.1%.

It is estimated that the Russian economy will shrink by 3.4% this year and 2.3% next year. The IMF predicted in July that the Russian economy would contract by 6% in 2022 and by 3.5% in 2023.

With these revisions, the growth expectation for emerging markets and developing countries was increased from 3.6% to 3.7% for 2022, while it was reduced from 3.9% to 3.7% for 2023.

Source: Trthaber / Translated by Irem Yildiz

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