Turkey’s Economy Expands 2.3 Percent in Q2 Amid Weak Domestic Demand

Turkey’s economy grew just 2.3 percent in the second quarter of 2024, which didn’t meet what the markets were hoping for. The main problem? People and businesses just aren’t spending like before. Earlier in the year, the economy had a stronger pulse, but higher interest rates have cooled things down. Folks are buying less, and companies are holding back on investments.

The government's been trying to slow down inflation by raising interest rates, but that’s made it tougher for people to spend. Exports chipped in a bit, but not enough to pick up the slack, and imports dropped too—it’s a sign that many sectors are taking a breather. Construction and manufacturing barely moved, but the service industry managed to hold up better.

Right now, Turkey’s economy is wrestling with expensive loans, a shaky lira, and stubborn inflation that keeps making everything more expensive. It’s a tough balance for policymakers: they want to steady the economy and rebuild trust in the markets, but inflation keeps getting in the way.

Unless people start opening their wallets again, growth will probably stay slow for a while. Real change depends on structural reforms and winning back investor confidence, but big risks—both at home and abroad—are still looming.