What are the OECD's projections for the Turkish economy? 'Until the end of 2024...'

The Organisation for Economic Co-operation and Development (OECD) has raised its global economic growth forecast for this year by 0.1 percentage points to 3.2 percent, anticipating that the ongoing disinflation process, rising real incomes, and less restrictive monetary policies in many countries will support demand.

The OECD published its Economic Outlook report under the theme 'Turning the Corner'.

According to the report, global output growth remains resilient and the process of declining inflation continues. While relatively strong growth is observed in many G20 countries, including the US, Brazil, India, Indonesia, and the UK, weaker growth has been seen in several economies, including Germany.

Economic activity has remained strong, particularly in the service sector. Although the rise in real wages supports household income and spending, purchasing power in many countries has not yet fully returned to pre-pandemic levels.

On the other hand, while global trade is recovering faster than expected, shipping costs remain high and export orders continue to show a moderate trend.

COST AND PRICE PRESSURES ARE FELT

On the inflation front, despite a decline in goods prices, cost and price pressures continue to persist in the service sector in many countries.

In this context, the global economy is expected to grow by 3.2 percent this year, with the expectation that the ongoing global disinflation process, improvements in real incomes, and less restrictive monetary policies in many economies will support demand. This rate is 0.1 percentage points higher than the OECD's forecast announced in May.

The OECD kept its global economic growth forecast for 2025 unchanged at 3.2 percent.

While economic growth in the US is expected to slow down but be supported by easing monetary policy, the growth forecast for this year remains unchanged at 2.6 percent. However, the OECD has revised its 2025 growth forecast for the US economy downward by 0.2 percentage points to 1.6 percent compared to its May projection.

The OECD did not change its 0.7 percent forecast for economic growth in the Eurozone this year, but revised its 2025 forecast downward by 0.2 percentage points to 1.3 percent.

In the report, the growth forecasts for the Chinese economy for this year and 2025 remained unchanged at 4.9 percent and 4.5 percent, respectively.

POLITICAL TENSIONS POSE RISKS

The report predicts that inflation will return to target levels in most G20 countries in 2025, but warns that significant risks to the global economy persist.

While there is a risk that ongoing geopolitical and trade tensions could increasingly harm investments and raise import prices, it is estimated that economic growth could slow more sharply than expected as labor markets cool, and potential deviations from the disinflation path could trigger disruptions in financial markets.

The OECD warned that as inflation becomes more moderate and pressures in the labor market ease, monetary policy rate cuts should continue, but the timing and scope of these cuts must remain data-dependent.

TURKEY'S ECONOMY TO GROW BY 3.2 PERCENT IN 2024

The OECD has revised its growth forecast for the Turkish economy for this year downward by 0.2 percentage points to 3.2 percent, and for 2025 downward by 0.1 percentage points to 3.1 percent.

According to the OECD, which predicts that inflation in developing economies, including Turkey, will remain higher than in developed economies, inflation in Turkey will ease by the end of this year and throughout 2025 but will remain in double digits.

In this context, the OECD recommended that a tight monetary stance should be maintained in Turkey until a certain period in 2025 to ensure that inflation clearly moves toward the target.

Minister of Treasury and Finance Mehmet Şimşek had announced that Turkey's growth expectation had been revised down from 4 percent to 3.5 percent according to the Medium-Term Program (OVP).