International credit rating agency Moody’s on Thursday upgraded its forecast for Turkiye’s economic growth this year, marking its second revision in almost as many months.
In its Global Macro Outlook report, Moody’s said it sees the Turkish gross domestic product (GDP) expanding by 5.3% this year. It left its forecasts for 2023 and 2024 unchanged at 2% and 3%, respectively.
The latest estimate marks an upward revision from the rating agency’s report in late August when it upgraded its 2022 view to 4.5% from 3.5% after Turkiye reported stronger-than-expected growth in the second quarter.
The economy expanded 7.6% year-over-year in the July-September period, according to official data, extending a hot streak on strong domestic demand and exports.
Moody’s on Thursday lowered its growth expectations for 2023 as it warned the global economy was on the verge of a downturn amid extraordinarily high levels of uncertainty amid persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility.
It said declining activity in advanced economies, primarily in Europe and North America, would drive a sharp slowdown in 2023 global GDP growth. In 2024, global economic activity will accelerate but remain tepid, it said.
“Still, a period of relative stability could emerge by 2024 if governments and central banks manage to navigate their economies through the current challenges,” it added.
Moody’s expects real GDP growth in the Group of 20 (G-20) economies to decelerate to 1.3% in 2023, significantly lower than the previous estimate of 2.1%,and down from an estimated 2.5% growth this year.
In 2024, global economic activity will accelerate, but only at a below-trend 2.2% growth rate, it said.
Moody’s said that the decisive end to the decadelong era of low interest rates and quantitative easing had generated large financial losses in asset values around the world, raised dollar funding costs and widened credit spreads.
It said that so far, the adjustment to higher rates has come without a large systemic financial event with global implications, and its baseline forecasts assume that central banks will avoid a disorderly tightening of financial conditions.