economy of Turkey

Turkey’s economy grew at 3.9% in the third quarter

Turkish GDP growth has halved but remains above that of the euro zone, where the economy grew by just 0.2%.

Turkey’s economy managed to grow by 3.9% in the third quarter, halving its GDP growth rate compared to the 2nd quarter but still remaining well above the average for EU countries, where the Gross Domestic Product of the euro zone experienced an expansion of just 0.2% in the same period.

According to official data published today by the Turkish Statistical Institute (TÜİK), in the period between July and September the Turkish GDP grew by 3.9%, well below the growth of the 2nd quarter, weighed down by the very high inflation and by the fall global demand, which is slowing down both domestic consumption – one of the main engines of the Turkish economy – and exports from Turkey, which has its main export market in the EU, especially in Germany.

The growth of the Turkish economy has, however, come at a high price: it has been possible thanks to the policy of the Turkish Central Bank – supported by Erdoğan himself – of systematically cutting interest rates, which are currently at 9% in its one-week reference rate: this has supported production, employment and exports in the Eurasian country; but also inflation, which is out of control and rose to 85.5% in October.

The rise in prices, especially in food and energy, has also been aggravated by the increase in domestic consumption after the end of the restrictions due to the pandemic, and above all by the war in Ukraine, since Turkey imports almost all the gas and oil it consumes.

Despite the low interest rate policy, the Turkish government intends to reduce inflation by boosting the growth of the Turkish economy with the aim of ending the structural deficit of the State, in what has been dubbed as the “Turkish Economic Model“.