The Surge in Turkish Economy: A Focus on Household Consumption
In the closing months of 2022, Turkish economy started to pick up. A big part of this was thanks to increased household Consumption. Data from Turkstat, the official statistics body of Turkey, confirms this uptrend. And with inflation finally dropping after 25 years, things are looking positive. Here, we explore what’s behind this growth and what might be next for Turkey in 2023.
Breaking Down the 2022 Growth
Between October and December 2022, Turkey’s GDP grew by 0.9%. This was a bounce back from a slight dip of 0.1% the previous quarter. Yearly, the growth was 3.5% for this quarter, a little under the 4% from the third quarter.
Why Did Turkish Household Consumption Increase?
The last quarter of 2022 saw a huge 16.1% increase in household spending from the previous year. Government spending went up by 9%, and business investment by 2.6%. This rise in household spending shows that people are becoming more confident in the economy. And when people spend more, demand goes up. This is always a good sign for the economy.
Looking at the Whole Year
For all of 2022, the GDP growth was 5.6%. Strong exports and government support, like tax breaks and aid to citizens, played a big role. Given the challenges of COVID-19 and high inflation, this is an impressive rate.
What’s in Store for 2023?
2023 started on a tough note with the devastating earthquakes. These natural disasters took lives and caused a lot of damage. But there’s some hope. The central bank of Turkey has reduced its key interest rate from 9% to 8.5%. This might help boost economic activities. Plus, the bank feels that the earthquakes won’t hinder long-term economic growth.
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