While Europe is facing an unprecedented energy crisis, Turkey remains partly spared from the consequences of the Ukrainian conflict. It is not affected by cuts in Russian gas deliveries but remains impacted by a historically high gas price on international markets. The underground gas storage facilities were 80% full at the beginning of September and should reach full capacity by the end of the month.
The Turkish economy continues to surprise positively by posting the highest growth rate within the G20 and the OECD in Q2 2022: +7.6%, despite a deteriorated international context. The unemployment level fell in June to reach 10.3%, foreign trade progressed and reached USD 53.9 billion in August (+56.2% y/y) and the trade balance deficit fell to -11.3 billion USD (+162% y/y). Summer tourism figures are positive, catching up with pre-pandemic levels.
On the other hand, inflation continued to rise in August. The consumer price index recorded an increase of +47.85% compared to December 2021. The producer price index in August 2022 recorded an increase of +74.13% compared to December 2021. As part of the anti-inflationary and export promotion measures, the Central Bank of the Republic of Turkey lowered its interest rates by 100 basis points again on September 22, and its main policy rate is now at 12%.
In view of recent performance, the Turkish government has published its new medium-term economic program (2023-2025) with new macroeconomic forecasts: +5% for 2023, +5.5% for 2024 and 2025. An inflation rate of 24.9% and an unemployment rate of 9.6% are set as targets. The government has also announced the launch of a vast construction plan for 500,000 housing units spread out between 2023 and 2028, which should ensure access to the property for the most disadvantaged households. In addition to stimulating activity in the construction sector, this project aims to reduce the rise in prices, historically high, of the real estate market.