Turkish Economy Sees Transformation in 2024
The year 2024 was a significant one for Turkey's economy, characterized by major policy shifts and strategic adjustments to combat inflation and ensure market stability.
Monetary Policy Adjustments
In the beginning, there was a continuation of strict monetary policies, but as the year progressed, there was a notable shift towards focusing on taming inflation as the central goal.
Leadership Changes at the Central Bank
Following the resignation of Governor Hafize Gaye Erkan, Fatih Karahan assumed the role of head of the Central Bank. Under his leadership, the bank implemented an aggressive tightening policy, significantly raising interest rates.
Success in Inflation Reduction
These policies led to a remarkable reduction in inflation rates, reaching a 17-month low by November, showcasing the effectiveness of the new approach.
Key Interest Rate Cut
One of the most pivotal moments came in late December when the Central Bank decided to reduce its key interest rate for the first time in almost two years, signaling a shift in strategy.
International Recognition and Rating Upgrades
The global credit rating agencies, Moody’s, Fitch, and S&P Global, upgraded Turkey's rating significantly, reflecting growing confidence in the country's economic management.
Record International Reserves and Credit Default Swaps
Turkey also saw an increase in international reserves, reaching a record level, and a decrease in credit default swaps, making financing more accessible and cost-effective.
Stock Market Performance and Investor Sentiment
The benchmark BIST 100 stock index demonstrated a strong recovery throughout the year, rising by nearly 34 percent by the end of 2024, driven by positive sentiment in the banking and industrial sectors.
Challenges Faced
Despite the progress, challenges such as rising unemployment rates and slower GDP growth were observed, reflecting the ongoing impact of economic adjustments.
Economic Growth Trends
GDP growth showed fluctuations throughout the year, with periods of contraction in the second and third quarters following initial growth, indicating a changing economic landscape.
