Turkey's budget deficit skyrockets by 101.6% in 2024

Turkey's economy is facing serious challenges. Recent data shows the country’s budget deficit has increased by over 100% in just one year, reaching £6.5 billion. This sharp rise highlights ongoing financial issues. President Recep Tayyip Erdogan has ambitious plans to make Turkey a "global economic powerhouse." Last year, the government launched the Twelfth Development Plan. This four-year initiative aims to enhance Turkey's international reputation, reduce inflation, and maintain solid public finances. Attracting Foreign Direct Investment (FDI) is critical for the government's plans. They hope to secure 1.5% of global FDI and 12% of regional FDI by 2028. However, many investors are hesitant due to high inflation and a lack of confidence in the Turkish currency. Concerns about the rule of law also play a role. Turkey has seen an increase in authoritarianism, with political power concentrated in the President’s office. Additionally, the country faces a large current account deficit and low foreign currency reserves, raising fears of a potential balance of payments crisis. Inflation in Turkey has shown some signs of improvement. It fell from 42.1% to 39.1% in February, marking the lowest rate since June 2023. This decline is attributed to easing prices in clothing and healthcare, but inflation remains significantly high.