MILLI RE 2023 ANNUAL REPORT

ECONOMIC OVERVIEW contraction in the industrial sector on the manufacturing front, and loss of pace in services. In the second half of 2023, the contribution of consumption outlays to growth declined somewhat due to the economy policies that prioritized combating inflation. Despite these developments, GDP increased by a strong 6.1% year-on- year in the third quarter of the year, with the support lent by the investment item, notably by private consumption and public consumption, and grew by 4% in the fourth quarter. Annual GDP obtained by addition of four quarters with chain linked volume index (2009=100) increased by 4.5% in 2023 compared with the previous year. In 2023, inflation has been high due to wage hikes, exchange rate developments, increased tax rates, food prices, the stickiness of services inflation, and the strong course of local demand. Moreover, the high course of producer prices and developments in pricing behavior led to broad-based inflationary pressures. Consequently, year-end CPI in 2023 stood at 64.77%. With the new economy administration in office, determined steps started to be taken for fighting inflation in the second half of the year. Accordingly, the CBRT initiated gradual monetary tightening and simplified macroprudential framework. Taking selective credit and quantitative tightening decisions that will support monetary tightening as well as rate hikes, the CBRT raised the policy rate by a total of 34 percentage points to 42.5% in seven meetings from June 2023 until the year-end. On another front, the effective actions taken by the economy administration helped secure upward revisions of 2021 2021 2021 11 271 226 2022 2022 2022 5.6 364 254 2023 2023 2023 4.5 362 256 GDP GROWTH RATE – BASED ON CURRENT PRICES (%) IMPORTS (USD BILLION) EXPORTS (USD BILLION) WITH THE NEW ECONOMY ADMINISTRATION IN OFFICE, DETERMINED STEPS STARTED TO BE TAKEN FOR FIGHTING INFLATION IN THE SECOND HALF OF THE YEAR. 46 MİLLİ RE