Republic of Türkiye: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Türkiye

International Monetary Fund

No 2024/312, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation highlights that a decisive shift in economic policies over the past year has tightened Türkiye’s overall policy stance. A significant tightening of macroeconomic policy since mid-2023 has substantially reduced crisis risks. Tighter financial conditions are weighing on domestic demand and inflation has fallen. Tax and expenditure measures partly dampened an expansionary fiscal impulse and the commitment to stronger incomes policies has strengthened credibility. The policy turnaround has reduced economic imbalances and revived confidence. Headline inflation has fallen as tighter financial conditions are weighing on domestic demand. Under the authorities’ gradual policy adjustment, inflation is expected to further decline. Risks around the baseline are significant and tilted to the downside. They include stronger-than-expected wage and price inertia, a reversal of capital flows, higher global energy prices, and escalating geopolitical tensions. Significant financial and external vulnerabilities remain. The authorities’ gradual approach to fighting inflation prolongs the period during which risks might occur.

Keywords: inflation expectation; IFC portfolio implementation; WB program; WBG portfolio; authorities project growth; Inflation; Central bank policy rate; Fiscal stance; Minimum wages; Global (search for similar items in EconPapers)
Pages: 99
Date: 2024-10-11
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