Türkiye | Weak supply coupled with solid demand

Summary

We revise our activity impulse report to become a flash release at the start of each month. By the end of January, our GDP nowcast indicators signal a nearly stagnant quarterly GDP growth rate, which corresponds to an annual growth of 3.5%. We keep our 2024 GDP growth forecast at 3.5% after realizing nearly 4.5% in 2023.

Key points

• Key points:
• The imbalance between demand and supply continues due to weaker production and ongoing strong demand.
• On the supply side, industrial activity adjusts more negatively, while turnover indices in real terms indicate that activity in other sectors continued to deteriorate but much more slowly.
• Our GDP nowcasts on demand sub-components indicate that the private consumption has not showed any signs of further slow-down compared to Nov23. Instead, investment demand has continued to decelerate and resulted in an undesired outcome to support production capacity of the economy.
• Private consumption continues to be mainly supported by goods component, particularly the durable goods, reflecting the need for additional monetary tightening in order to anchor inflation expectations.
• Overall financial conditions do not tighten further, while fiscal policy remains loose; which requires a clearer commitment to accelerate rebalancing in the economy and fight against inflation.

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