MILLIRE ENG2024

In 2024, the weaker performance of the global manufacturing sector exerted downward pressure on commodity prices through weaker conditions, while production cuts and sanctions helped limit the decline in crude oil prices. The average annual price of Brent crude oil fell from USD 82.2 per barrel in 2023 to USD 79.9 in 2024. Due to geopolitical uncertainties, supply constraints by oil- exporting countries, and sanctions on Russia, energy prices remained volatile throughout the year. For the upcoming period, the volatility in commodity prices is expected to persist, driven by the potential trade protectionism following Donald Trump’s victory in the U.S. presidential election and the prevailing geopolitical uncertainties. Amidst challenging global economic conditions in 2024, the Turkish economy experienced a more balanced growth composition. The fight against high inflation remained the utmost priority on the economic agenda. As the effects of tight monetary policy became more pronounced, particularly in the second and third quarters of the year, economic growth in 2024 slowed down to 3.2% compared to the previous year. Throughout the year, the contribution of consumption and investment expenditures to growth has declined, while net exports have provided a positive contribution. In May 2024, annual CPI inflation in Türkiye surged to 75.4%, marking its highest level since November 2022. However, in the second half of the year, inflation exhibited a downward trajectory, driven by the lagged effects of tight monetary policy and a favorable base effect, ending the year at 44.4%. Similarly, annual inflation in the domestic producer price index (D-PPI) fell from 57.7% in May to 28.5% by December. While inflation is expected to continue its downward trajectory in 2025, albeit at a slower pace, the outlook will remain sensitive to the course of inflation expectations and domestic demand conditions. The CBRT raised its policy rate from 42.5% to 45% in January 2024 and further tightened monetary policy in March, increasing the rate to 50%. Maintaining this level until December, the CBRT also undertook a series of macroprudential simplification steps throughout the year. These included the removal of the security maintenance requirement, continued gradual exit from FX-protected deposits (KKM) in favor of standard TL deposits, increases in reserve requirements, credit growth restrictions for commercial lending, and monetary tightening was reinforced. In parallel with the decline in inflation, the CBRT initiated a rate-cut cycle at its final meeting of the year, lowering the policy rate by 250 basis points to 47.5%, and emphasized its cautious stance and commitment to a tight monetary policy framework in light of persistent upside risks to inflation. January February March April May June July August September October November December 80 70 60 50 40 30 20 10 0 44.2 64.9 47.3 67.1 51.5 68.5 69.8 75.5 71.6 61.8 52 49.4 48.6 47.1 44.4 55.7 57.7 50.1 41.4 35.8 33.1 32.2 29.5 28.5 Inflation in 2024 - Annual Change (YOY) (%) CPI PPI GENERAL INFORMATION FINANCIAL RIGHTS PROVIDEDTOTHE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RISKS AND ASSESSMENT OF THE GOVERNING BODY ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES RESEARCH & DEVELOPMENT ACTIVITIES FINANCIAL STATUS FINANCIAL INFORMATION 51 2024 Annual Report