The European Bank for Reconstruction and Development (EBRD) has revised its growth forecast for Türkiye in 2023, lowering it to 2.5% from the previously projected 3%.
This adjustment results from the earthquake's impact in February and the anticipated credit tightening to address the country's external imbalances in the latter half of the year.
The EBRD's Regional Economic Prospects report, which slightly reduced the overall output forecast for all EBRD regions by 0.1% in 2023, published these revised forecasts on Tuesday.
The report highlights that Türkiye experienced a solid start to the year based on leading economic indicators. It also states that the output shock caused by the earthquakes is expected to be less than 1% in 2023.
The official estimates indicate that the earthquakes caused over $100 billion (TL1.97 trillion) in damages, imposing a significant burden on the country for reconstruction efforts.
The report identifies ongoing external vulnerabilities for Türkiye, including the continued growth of the current account deficit during the early months of the year. It also points out increased short-term external debt, low levels of foreign-exchange reserves, and mounting pressure on the Turkish lira as additional weaknesses.
Despite the positive effects of robust household and government spending on early 2023 growth, the report cites uncertainty surrounding economic policies after the elections as a crucial factor in determining the country's economic progress.
In 2024, the reconstruction efforts related to the earthquakes are expected to contribute to growth, with the Bank projecting a 3% expansion for the Turkish economy.
Thus far, the EBRD has invested over 17.3 billion euros (TL364.83 billion) in various sectors of the Turkish economy, primarily in the private sector.
