In 2023, anti-inflation efforts, financial tightening, geopolitical tensions and increased trade protectionism remained in the foreground in global economy. While the tight monetary policies implemented reduced inflation considerably, developed countries, in particular, did not experience a harsh economic slowdown despite these policies’ restraining impact on growth. Growth continued to float at the pre-pandemic level in developing countries led by China. While the developments in the Middle East that occurred in the last quarter of the year further exacerbated geopolitical risks, the world trade exhibited its weakest performance of the past 50 years in 2023, except during global crises and the pandemic period.
In 2024, global growth is projected to materialize at 3.1%, below its long-term average, due to high interest rates, fiscal supports that will diminish, high indebtedness and low productivity increases. Global trade, on the other hand, is forecasted to go up by 3.3% in 2024 after remaining unchanged in 2023. Global growth might remain flat with that in 2023, with potential decoupling among countries. In this context, our export markets and the EU and Middle Eastern countries in particular are anticipated to perform better in 2024 as compared to the previous year.
Global inflation is expected to keep declining owing to tight monetary policy and alleviated supply-side issues. While growth might receive support from potential additional loosening in financial conditions that might result from a faster-than-anticipated disinflation in 2024, possible commodity price increases that might stem from increased geopolitical risks and supply issues could bear a negative impact on global inflation and growth outlook.
We estimate that the Turkish economy will reach the order of USD 1.1 trillion with a positive performance once again in 2023, despite tough global conditions, aggravated geopolitical risks and the effects of the earthquake of February 6th that marks one of the worst disasters of our national history. Despite the weak outlook of global trade, goods exports reached USD 255.8 billion in 2023, breaking record of the Republic era.
Aiming to secure price stability through balanced and sustainable growth, the monetary policy stance was significantly tightened in the second half of 2023, and the steps taken served to achieve deceleration in the main tendency of inflation in the last quarter of the year. The budget deficit showed a transitory increase due to the impact of the measures taken for binding up the wounds of the earthquake. However, the ratio of budget deficit to national income excluding EU-defined general administration debt stock and earthquake expenditures was well below the Maastricht criteria in 2023.
Disinflation and economic rebalancing will continue to be the priority targets in 2024. In this context, we are predicting that the annual inflation will drop markedly from the second half of the year. In 2024, we are anticipating the Turkish economy to grow with a better-balanced composition and the current deficit to decline. Thus, 2024 will be a year of reduced macro risks and further strengthened financial stability.
Export-driven quality growth occupies a significant place in the development strategy of our country. Total goods and services exports including goods exports of USD 267 billion is targeted to be increased to USD 375 billion in 2024. In a bid to increase the support extended to our exporters, the capital of our country’s official export credit agency Türk Eximbank has been increased by TL 10.1 billion since July 2023 to date. Daily rediscount credit limits made available to exporters were increased by 10 fold to TL 3 billion, an upper cap was introduced for the interest rate on these facilities, and the 30% additional export price sales condition in case of utilizing the facility was eradicated.
Türk Eximbank’s support to our country’s exports in 2023 totaled USD 42 billion, comprised of USD 19.6 billion in loans and USD 22.4 billion in insurance/guarantees. In line with our growth strategy focused on investment, employment, production and exports, we are targeting to further increase the support our Bank extends to our exporters in 2024, and aiming for our Bank’s total support volume to reach USD 50 billion.
Osman ÇELİK
Chairman of the Board of Directors
