Turkey's Economy Grows 2.5% in Q2

Turkey's economy grew by only 2.5% in the second quarter of 2024, marking its slowest pace since the Covid-19 pandemic. This growth rate fell below expectations, with analysts predicting a 3.4% increase. The Turkish Statistical Institute reported a mere 0.1% quarterly increase in GDP, highlighting the impact of a year-long monetary tightening policy that has seen interest rates soar to 50% to combat inflation, which peaked at 75% earlier this year. Despite the slowdown, sectors like construction and real estate saw some growth; however, manufacturing activity has contracted for five consecutive months. Economic indicators suggest that the effects of high borrowing costs may worsen in the latter half of the year, although a hard landing is not anticipated. Overall, the data reflects the strains on businesses and households due to the restrictive monetary policies implemented since President Erdoğan's re-election.