IMF Resident Representative for the Republic of Turkey Bella: Global Growth Expected to Remain Stable in 2024 and 2025

During the second day of the International Arab Banking Summit held in Istanbul under the patronage of President Recep Tayyip Erdoğan, with the participation of Minister of Treasury and Finance Mehmet Şimşek and the Governor of the Central Bank of the Republic of Turkey (CBRT) Fatih Karahan, the session on “Global Economic Growth and Monetary Conditions” took place.

Speaking at the session, IMF Resident Representative for the Republic of Turkey, Gabriel Di Bella, stated that the global economy has continued to grow steadily over the past two years, challenging stagflation and global recession forecasts, both in advanced and developing economies.

Pointing out that private consumption and stronger-than-expected public spending supported a better growth outlook last year, Bella said, “Labor market conditions are still tight. Especially in advanced economies, we see that private consumption has been supported by the decrease in excess savings accumulated during the global pandemic. The news is not only good on the demand side; we also receive very good news from the supply side.”

Bella stated that global growth was estimated at 3.2% last year, adding, “It is expected that this rate will remain roughly stable in 2024 and 2025. Based on the partial recovery of the Eurozone and the faster growth of emerging and developing market economies compared to advanced economies, we have slightly revised upwards global growth, but we expect the growth rate to remain roughly at the levels observed in 2023.”

Bella noted that China’s growth could be disrupted if financial stress caused by declines in asset prices and disappointment in the real estate sector in the country persisted, stating, “Of course, due to China’s status as such a large and global economy, this situation may have repercussions for the rest of the world.”

“Turkey is very resilient to economic crises” Hedwige Nuyens, the Director General of the International Banking Federation (IBFED), stated that the COVID-19 pandemic was a major outbreak, reminding that countries significantly depleted their capital and reserves.

Nuyens pointed out that Turkey still has a very young population and is a country highly resistant to economic crises, saying, “If we want to preserve the workforce, we will have to face a decrease in the birth rate, as in many countries. We should focus on how to deal with this along with climate change.”

Nuyens emphasized the importance of consumer confidence in sustaining economic growth, saying, “As bankers, as economists, we need to find out how we can benefit from economic consumer confidence.”

“Islamic banking has become mandatory and important over time” Iyad Asali, the General Manager of the Islamic International Arab Bank in Jordan, mentioned that today there are over 600 Islamic banking institutions and Islamic banking is present in 72 countries.

Asali commented, “For many years, articles have been written to find alternatives to traditional banking. Over time, turning to Islamic banking has become mandatory and very important.”

Asali noted that Islamic Banks around the world actively contribute to the development of countries, saying, “Islamic Banks are supported by modern technology, digitize their operations, and can offer Sharia-compliant banking to various customers.”

“Gulf countries will show very good growth” Adnan Yousif, President of the Bahrain Banking Association, expressed that Gulf countries will continue to show very good growth, stating that banking activities will yield positive results in this growth.

Yousif mentioned that they expect a growth level close to last year in the banking sector in Gulf countries, indicating the spread of Islamic banking in the region and many countries worldwide.

Levent Güven, Deputy General Manager responsible for Treasury and Financial Institutions at Alternatif Bank, stated that labor force growth stagnation, aging population, and increased migration restrictions have affected the decline in global growth expectations.

source: prepared by Melisa Beğiç

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