Fitch lifts Türkiye’s medium-term growth forecast

Fitch Ratings have revised upwards its medium-term potential growth for Türkiye to 4.1 percent from a previous 3.9 percent.

The Turkish economy grew by 3.8 percent in the second quarter of 2023, after expanding 3.9 percent in the previous period.

The government projects that the GDP growth will slow from an estimated 4.4 percent this year to 4 percent next year. The economy will expand 4.5 percent and 5 percent in 2025 and 2026, respectively, according to the updated forecasts in the government's medium-term program.

Türkiye's GDP growth averaged 3.9 percent between 2000 and 2009, while the average expansion rate was 5.8 percent in the 2010-19 period. The annual average growth was 5.4 percent from 2003 to 2022.

Fitch Ratings reduced its estimate of medium-term potential growth for the 10 emerging markets covered in its Global Economic Outlook (GEO) to 4 percent on a GDP weighted-average basis.

This is down from 4.3 percent in its previous assessment in 2021.

"The reduction is mainly due to a large reduction of 0.7pp to the estimate of China's supply-side growth potential," the agency said.

It cut the estimate for China to 4.6 percent from 5.3 percent, for Russia to 0.8 percent from 1.6 percent, for Korea to 2.1 percent from 2.3 percent and for South Africa to 1 percent from 1.2 percent.

"However, we have made large upgrades to India and Mexico, with the latter benefitting from a much better outlook for the capital to labor ratio."

India's estimate is higher at 6.2 percent from 5.5 percent and Mexico's at 2 percent from 1.4 percent.

It revised the estimate for Poland to 3 percent from 2.6 percent and that for Brazil to 1.7 percent from 1.5 percent.