2023 has been a challenging year for the global economy.

2023 came up with a series of risk factors that slowed down global economic recovery. Besides the ongoing war between Russia and Ukraine, geopolitical risks and regional tensions in the Middle East and Asia increased and repressed global trade.

The trade war between the US and China continued and protectionist policies began gaining weight in global trade. Although global trade displayed a booming tendency in the post-pandemic period due to demand backlog, this trend lost momentum in 2023.

While the supply chain issues emerging during the pandemic were eliminated to some extent, logistic costs remained an issue in 2023.

Tight stance maintained by numerous central banks in a bid to counter the escalating global inflation gave rise to volatilities in money and capital markets in 2023. Inflation indicators improved in a number of countries; notwithstanding, inflation stayed above long-term averages and central banks’ targets.

In 2023 when the effects of global warming and climate change were felt at an even greater degree, agricultural production continued to be injured by climate disasters such as drought, floods and extreme weather, which resulted in high food prices.

Economic activity sustained its strong course in Türkiye.

During 2023, the Turkish economy suffered from a number of negative events including the slowdown in global economy, weakening in its main export markets, and the devastating earthquakes that hit our country in February. Despite these factors, economic activity sustained its strong course in Türkiye with the support lent by domestic demand.

The second half of the year saw effective and determined steps being taken to fight inflation, along with initiatives taken to strengthen financial stability by way of structural reforms and fiscal policy besides monetary policy.

While these efforts helped expand commercial credits, their composition began improving as export and investment credits achieved increased share.

Macroeconomic policies introduced in the aftermath of the general elections held in May initiated the disinflation process. Thanks to the selective lending practices prioritizing exports and manufacturing, and the positive setting resulting from contracted current deficit, Türkiye’s CDS premium slid down to below 300 points and a positive investment environment was formed.