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05-03-23

Moody's raises Türkiye's economic growth forecast for 2023, 2024 due to earthquake reconstruction efforts

(MENAFN) Moody's, a global rating agency, has raised its economic growth forecast for Türkiye for 2023 and 2024. The reason behind the upward revision is the new economic activity associated with the reconstruction in regions that were devastated by earthquakes. According to the revised projections, the agency expects Türkiye's real gross domestic product (GDP) growth at 2.3% in 2023, which is higher than the 2% growth projected earlier, and at 4% in 2024, which is up from its earlier estimate of 3%.

Moody's explained that although natural disasters like earthquakes cause immense damage to existing assets and suppress economic activity in the short term, they ultimately boost GDP growth as rebuilding efforts by public and private sectors add to it. However, the speed with which businesses and households in the affected regions will recover is uncertain. Reconstruction takes time, and the pace of new activity owing to reconstruction each year is also unknowable, according to the report. Fiscal and monetary policy support will be critical in this regard, and the extent of it will have a significant impact on the outcome.

Moody's also mentioned that the regions affected by the earthquakes account for a significant portion of Türkiye's population and GDP, and therefore the reconstruction spending is expected to support economic growth in the coming quarters. However, it is still early to determine the net impact on inflation and the economy as a whole. The agency believes that fiscal and monetary policies will remain supportive, and inflation is likely to remain high as a result.

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