During 2024, global economy put up resistance against several challenges to record moderate growth, and global inflation took a downturn. The concurrent rate cuts that came in the second half of the year from the US Federal Reserve System (the Fed) and the European Central Bank (ECB) demonstrated that tight monetary policies came to an end.
Despite the recovery in global economic activity, the decoupling in the growth outlook of developed countries became evident. As the US decoupled positively from other developed economies on the back of its sustained growth rate enabled by the lively domestic demand, the EU countries failed to prevail over the low growth issue stemming from decreased productivity. In China, which is the largest economy among developing countries, anticipated growth momentum could not be captured due to weak domestic demand, deflation concerns, and increasing protectionism in global trade policies.
Global growth projections continue to remain below historic averages because of the weak course of investments, low rise in productivity, and high indebtedness levels. In the World Economic Outlook January 2025 update, the IMF projected global growth rate to be 3.3% in 2025 and 2026, which is estimated at 3.2% for 2024. Global trade, on the other hand, is anticipated to increase by 2.7% and 3% in 2024 and 2025, respectively, according to the World Trade Organization (WTO) data.
Although political uncertainties eased following the completion of the elections in a number of countries in the world, growing ambiguity concerning the economy and trade policies of the new governments and ongoing geopolitical tensions pose a risk to global inflation and indicate that central banks of developed countries may act more prudently in their monetary policies.
From the second half of 2023, an economy program that targets permanent welfare increase through balanced, inclusive and sustainable growth has been in place in Türkiye. The Medium Term Program (MTP) is intended to achieve price stability, fiscal discipline, rebalancing in growth, sustainable current deficit, productivity and the structural reforms that will increase competitive strength.
The rebalancing in growth, which started in the second half of 2023 thanks to the program being implemented, continued in 2024, and the Turkish economy grew by 3.2% in the first three quarters of 2024. The MTP (2025-2027) targets a gradual improvement in growth to 4% in 2025 and 4.5% in 2026.
Owing to the steps taken to establish permanent price stability, which makes the main focus of the program, annual inflation went down by 20.4 points as compared to year-end 2023. The disinflation process is in progress.
In a bid to reach the program goals by establishing price stability permanently, monetary, fiscal and revenue policies are being implemented in coordination. For further leveraging the gains secured, structural reforms are being enforced based on a growth strategy erected on investments in productive areas and backed by efficiency increases.
In spite of geopolitical developments and the moderate demand from our partners in trade, the current deficit in 2024 amounted to USD 10 billion due to the resilient structure of exports, reduced imports and increased tourism revenues. The ratio of current deficit to GDP, which was 3.5% in 2023, was below 1% in 2024.
While the program strengthened macro financial stability, the CBRT reserves grew significantly, and this positive portrait was supported by an upgraded credit rating and a sharp decline in country risk premium.
The discipline secured in fiscal policies is one of the most fundamental building blocks of the gains by the Turkish economy. In 2024, the Savings and Efficiency Package in the Public Sector was introduced, and steps were taken to increase justice and effectiveness in taxation and to combat unregistered economy. With the effect of these steps, the ratio of the central government’s budget deficit to national income is estimated as 4.9% in 2024, which is in line with the MTP projection.
Our goods and services exports reached USD 377 billion in 2024, which has been a year of new records for us. For 2025, our total exports goal including services is USD 390 billion.
The elements of uncertainty affecting our exports in 2025 mainly include globally increasing protectionist trade policies and the continued contraction in the manufacturing industry in the EU countries.
As Türk Eximbank which is our country’s official export credit agency, we have undertaken significant initiatives for increasing the inclusiveness of our services and for delivering diversified services to a broader exporter group in 2024. We have taken effective actions to furnish more affordable financing facilities to our exporters with the alternative credit guarantees we offer. As we improved our insurance service quality by pursuing best practices, we also started broadening our sales channels. We have also made progress towards introducing financing and insurance products in participation banking.
We have reached the highest volume in the history of the Bank with our annual support volume that we have increased to USD 49 billion in total, comprised of USD 24.1 billion in loans and USD 24.6 billion in export credit insurance.
As we further leverage all our products with our innovative perspective and our approach focused on exporter satisfaction, we target to increase the support mechanisms we provide to high-technology and value-added exports and green transformation, as well as the share of long-term investment loans.
We will continue to work altogether to promote the exports ecosystem to a stronger and more competitive position.
Osman ÇELİK
Chairman
