International credit rating agency S&P Global on Tuesday revised upward its growth forecast for the Turkish economy for this year, as analysts cited improved macroeconomic conditions for emerging markets due to resilient global growth and loosening financial conditions.
Türkiye's gross domestic product (GDP) will likely expand by 3% in 2024, the agency said, compared to its earlier forecast of 2.4%.
The economy grew 4.5% in 2023 as strong domestic demand offset the impact of a slowdown in main trading partners and devastating earthquakes in February.
In its latest economic outlook report on emerging markets, S&P Global raised its 2025 outlook to 3% from 2.7%, while downgrading its forecast for 2026 to 2.6% from 3%.
Analysts expect significant growth divergence across emerging markets in 2024, moderating for many countries that outperformed in 2023 and slightly increasing for some countries that underperformed.
"Growth will moderate for many countries that outperformed in 2023 (such as Brazil, Mexico and India) but remain relatively strong. Conversely, some countries that underperformed last year (among them, Colombia, Peru, Thailand, Hungary, Poland and South Africa) will grow modestly faster in 2024, but in most cases, activity will remain subdued," the report said.
The agency said the U.S. economy is expected to expand by 2.5% in 2024 due to the resilient labor market. That compared to 2.4% in the February report, while it remained unchanged at 1.5% for next year.
The report highlighted that in the coming years, economic growth is expected to continue slightly below its potential.
Regarding inflation in the U.S., the agency suggested that although inflation is likely to approach the Federal Reserve's (Fed) target of 2% throughout the year, it may remain above the target.
The report attributed this to persistently high service price inflation, despite moderate declines in goods prices.
The agency said higher-than-targeted inflation may limit the ability to cut interest rates this year. It suggested that the first cut would likely occur in the summer months, with a total of 75 basis points of rate cuts expected in 2024.
Analysts expect a sharp decline of 125 basis points in rates next year. However, the agency emphasized the risks that easing could be slower in 2024 and 2025.
The report stated that resilient global growth and easing financial conditions since the end of 2023 have marginally improved macroeconomic conditions for emerging markets.
However, it pointed out that they still face the delayed effects of high interest rates and the consequences of the expected below-trend growth in the second half of the year in the United States.
The total economic growth forecast for emerging markets in 2024 was raised from 4.1% to 4.2%, and from 4.5% to 4.6% for 2025.
The agency maintained its China view at 4.6% for this year and raised it from 6.4% to 6.8% for India.