S&P Raises Turkiye’s 2024 Growth Forecast to 3%

International credit rating agency S&P Global increased its 2024 total growth forecast for developing countries to 4.2%, while increasing its forecast for Turkiye to 3%.

S&P Global published its second quarter economic outlook reports for the USA and emerging markets.

In the report on the US economy, it was stated that economic growth in the US is expected to be 2.5% in 2024, as the labor market remains solid.

The report noted that the economy continues to be expected to grow slightly below potential in the next few years.

The report stated that inflation in the USA is likely to approach the 2% target of the US Federal Reserve (Fed) throughout the year, but remain above the target, and that this is a reflection of the constantly high service price inflation, although the prices of goods have decreased moderately.

The report pointed out that inflation above the target will limit the ability to cut interest rates this year, and stated that the first cut will probably come in the summer and a total interest rate cut of 75 basis points is envisaged in 2024.

The report stated that a sharp decrease of 125 basis points in interest rates is expected next year, but it was emphasized that there are risks that the pace of relaxation may be slower in 2024 and 2025.

In the report, the growth expectation for the USA was increased from 2.4% to 2.5% for this year according to the February report, while it was kept constant at 1.5% for next year.

Turkiye’s 2024 growth forecast increased by 60 basis points

In the report on developing countries, it was stated that resilient global growth and loosening financial conditions, especially in the USA, have marginally improved macroeconomic conditions for emerging markets since the end of 2023.

The report, however, pointed out that developing countries still have to deal with the lagged effects of high interest rates and the consequences of the US shifting to below-trend growth, expected in the second half of the year.

The report noted that growth in developing countries will differ significantly in 2024, and that moderate growth is predicted for many better-performing countries in 2023, while slightly increasing growth is predicted for some low-performing countries.

The report stated that the total economic growth forecast of developing countries was increased from 4.1% to 4.2% for 2024 and from 4.5% to 4.6% for 2025.

In the report, it is stated that the biggest upward revisions in growth forecasts for this year compared to the November report were made for Mexico with 70 basis points, Turkiye with 60 basis points, Peru with 50 basis points and India with 40 basis points.

It was reported that the forecasts were reduced the most for Argentina by 200 basis points, Saudi Arabia by 50 basis points, Hungary by 40 basis points, and Poland and Thailand by 30 basis points each.

In the report, this year’s growth forecast for China was kept constant at 4.6%, while it was increased for India from 6.4% to 6.8%.

The growth forecast for Turkiye was increased from 2.4% to 3% for 2024 and from 2.7% to 3% for 2025.

On the other hand, the growth expectation for the Turkish economy was reduced from 3% to 2.8% for 2026.

Source: Bloomberght / Prepared by Irem Yildiz

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