Mahfi Eğilmez's assessment of the 2023 Turkish economy

Economist Mahfi Eğilmez stated, "The budget deficit in the first 8 months is 383 billion TL. The expected deficit is almost 4 times that amount. We will face a massive budget deficit at the end of the year."

Eğilmez's statements are as follows:

The global system grew by around 3 percent. Average income per capita approached 14 thousand dollars. Since this amount is at the middle-income level according to the measure I propose, countries with per capita income around this amount can be defined as middle-income countries. In the global system, inflation declined compared to 2022, falling from 8.8 percent to 6.6 percent. We can say that the global trade volume also remained stagnant with a 2.4 percent increase.

While this is the general outlook, some economies have entered a recession. The most important of these was Germany. Germany experienced economic contraction for two consecutive quarters. For the first time in a long time, Japan faced inflation of around 3 percent. This development is considered a sign of Japan's exit from the stagnation it has been in for years.

AVERAGE PER CAPITA INCOME IN TURKEY REMAINS BELOW THE WORLD AVERAGE

According to the latest estimates, Turkey's GDP seems likely to be 1.067 trillion dollars with an annual growth rate of 3.9 percent. This GDP corresponds to 1 percent of the world GDP. Since Turkey's share in world GDP has been 1 percent for years, there is no change here. Per capita income is estimated to be over 12 thousand dollars. Since the average income in the world is close to 14 thousand dollars and Turkey remains below this, it is understood that we will continue to be in the middle-income trap.

Turkey's inflation (59.9 percent) is more than 8 times the world average inflation (6.6 percent). We estimate that this rate, which occurred as of September, will be higher at the end of the year. This means that inflation is the biggest problem for the Turkish economy.

The TL continues to lose value against the dollar and other foreign currencies. The external depreciation of the TL, which accelerated with the Central Bank of the Republic of Turkey (TCMB) lowering interest rates, cannot recover now despite consecutive interest rate hikes. The reason for this is that although inflation is 58.9 percent, the TCMB interest rate is at 30 percent even after being increased.

The rate that should really be looked at in unemployment is the rate that shows the total of the unemployed + those who are unemployed but do not apply. This rate is very close to 23 percent: A quite high rate.

BUDGET DEFICIT CONTINUES TO BECOME MASSIVE

The budget deficit in the first 8 months is 383 billion TL. The expected deficit is almost 4 times that amount. A massive budget deficit will be encountered at the end of the year.

Turkey's total external debt stock is 475.7 billion dollars as of the first six months of 2023. When considered together with the estimated year-end GDP, it appears to be around 45 percent of GDP. It is not a high rate, but its financing is problematic.

News Source: 12punto