UN announces with a 2025 outlook: Double-digit inflation warning

The United Nations (UN) has revised its growth forecasts for Turkey downward, while arguing that inflation will continue to remain in double digits until 2025.

In its "World Economic Situation and Prospects 2024" report, the UN stated that the Turkish economy grew by 5.5 percent in 2022, but estimated that growth slowed to 3.5 percent in 2023, and expects growth to fall further to 2.7 percent in 2024. It projected that growth would recover to 3.1 percent in 2025.

The organization had previously projected that the Turkish economy would grow by 4.2 percent in 2023, and by 3.5 percent in 2024 and 2025.

According to the report in Ekonomim; the UN stated in its assessment for Turkey: "In early 2023, the country was shaken by a series of earthquakes that caused widespread damage and the deaths of tens of thousands of people. Initial assessments estimated direct damage at 34 billion dollars (World Bank, 2023) and the broader economic cost at 84 billion dollars (TÜRKONFED, 2023), which meant a loss of approximately 1 percent in GDP for that year. However, it was later determined that the effects were largely localized in the affected region. In terms of GDP, reconstruction spending in the earthquake-affected areas partially offset the disruption in economic activity. Furthermore, stronger-than-expected domestic demand and fiscal stimulus in the first half of the year pushed economic growth above the forecasts announced at the beginning of the year."

THEY PROVIDED A FIGURE FOR 2025

Arguing that the unconventional monetary policy and low interest rates implemented for years have not significantly increased productivity and economic growth in Turkey, the UN stated that this situation has resulted in a weak local currency.

Stating that the weak currency has led to a rapid rise in inflation, the UN argued that although there will be a decline in inflation in 2024, it will continue to remain in double digits until 2025.

Estimating that inflation in Turkey was 55.2 percent in 2023, the UN projected that annual inflation would fall to 42.6 percent in 2024 and to 21.7 percent in 2025.

News Source: 12punto