Single-digit inflation not on the horizon

The EU Commission's 'European Economic Forecast Autumn 2023' report has been published.

In the report titled 'A modest recovery after a difficult year', it was projected that the EU economy would grow by 0.6 percent in 2023 and 1.3 percent in 2024, while the Eurozone economy is expected to grow by 0.6 percent in 2023 and 1.2 percent in 2024.

In the EU Commission's previous 'Summer' report, it had been estimated that the EU would grow by 0.8 percent this year and 1.4 percent next year, and the Eurozone by 0.8 percent this year and 1.3 percent next year.

With the latest report, the 2023 and 2024 growth forecasts for the EU and the Eurozone have been revised downward.

INCREASED RISKS NOTED

The report noted that the Russia-Ukraine war and conflicts in the Middle East have increased uncertainty and downside risks to the economic outlook.

While the report stated that the impact of these developments on energy markets is currently limited, it also indicated that there is a risk of disruption in energy supply.

The report pointed out that economic developments in the EU's major trading partners, particularly China, could also pose risks, and stated that monetary tightening in Europe could weigh on economic activity for longer and more heavily than expected, and that firms, households, and public finances might struggle to adapt to the high-interest-rate environment.

SINGLE-DIGIT INFLATION NOT IN SIGHT

The report mentioned that weather events such as heatwaves, wildfires, droughts, and floods negatively affect the economy along with the environment, and stated that steps taken in Turkey toward a return to more stability-oriented macroeconomic policies have begun to constrain strong growth in domestic demand.

In the report, it was projected that the Turkish economy would grow by 4.2 percent in 2023, 3.5 percent in 2024, and 4 percent in 2025, and that inflation would be 55.4 percent this year, 53.6 percent in 2024, and 22.9 percent in 2025.