Welcome to Extreme Investor Network, where we provide you with expert insights and analysis on the stock market, trading, and all things Wall Street. Today, we are diving into the recent trends in credit growth and carefully managed policy adjustments in Türkiye that are impacting the economy.
In August 2024, credit growth in local currency decelerated to 30% YoY, a significant drop from 69% the previous year. This slowdown is expected to be prolonged by a more restrictive policy mix, with real GDP growth projected at 3.5% in 2024 and 3.2% in 2025. While these numbers may seem lower compared to previous years, they indicate a shift towards a more stable economic environment.
One of the key factors contributing to this stability is the carefully managed policy adjustments in Türkiye that are aimed at unwinding external imbalances and rebuilding buffers. The monetary policy pivot in the country has led to moderating tensions on the balance of payments, with the current account turning positive in June-July 2024. This positive trend is expected to continue, with the current account deficit narrowing to 1.8% of GDP in 2024, down from 4.0% in 2023.
The improvement in the current account balance can be attributed to a stronger trade balance, driven by lower energy and gold imports, along with robust goods exports and tourism receipts. The depreciation of the lira has boosted external competitiveness, further supporting these positive trends.
Additionally, growing confidence in the authorities’ commitment to a balanced policy mix has resulted in lower foreign-currency protected deposits and higher foreign capital inflows. Non-resident holdings of domestic debt have significantly increased, indicating confidence in lira-denominated assets and a reduced dollarization of the Turkish economy.
Overall, these carefully managed policy adjustments are not only improving the current account balance but also driving higher net foreign assets in Türkiye. As we continue to monitor these trends, investors can look forward to a more stable and promising economic outlook in the country.
Stay tuned to Extreme Investor Network for more exclusive insights and analysis on the latest developments in the stock market and beyond. Happy investing!