In 2022, increasing inflationary pressures, sharp increase in energy prices, Russia-Ukraine war, aggressive tightening steps of central banks and increasing recession concerns played significant role in global economy.

In 2022, increasing inflationary pressures, sharp increase in energy prices, Russia-Ukraine war, aggressive tightening steps of central banks and increasing recession concerns played significant role in global economy. As the recovery of global economy continue, significant increases in growth figures were realized this year with the base effect. Increasing commodity prices due to Russia-Ukraine war and increased demand, problems continuing in supply chain caused highest inflation of recent years. In this context, central banks ceased their expansionary monetary policies and started implementing tightening monetary policies. Although it is anticipated that high inflation is only temporary around the globe, the fact that inflation is at very high levels compared with prior periods show that concerns about current trend in inflation will continue in 2023.

While last year US economy recovered, decreases in growth rates in 2022 raised concerns about economic recession. US Central Bank (Fed) did not change policy interest in 2021, however with the opening of economy, unbalance of supply and demand caused high inflation and with aggressive tightening steps interest increases started in 2022. As a result, Dollar index (DXY) increased in 2022. USA unemployment rates continued the decreasing trend in 2022 which started in 2021. Labor market is being monitored closely with the perspective of solution to inflation problem and interest rate reduction. To eliminate the contraction in labor market, the need to slow down the economy arises, accordingly it is expected that the wage tendencies will decrease in line with inflation and there will be loss of employment. High wages create pressure on labor costs and inflation. In this context, Fed’s monetary policy that will be implemented in the following period is closely monitored by the global economy.

European economy showed a partial improvement in 2021 with the recovery of global economy. However, increasing energy prices caused by Russia-Ukraine war in 2022 resulted in significant increases in cost inflation in the European continent. European Central Bank (ECB) ended the asset purchase program to fight against inflation and increases interest significantly. Also, manufacturing industry PMI index being under 50 points in 2022 which is the threshold level increased economic concerns in Euro Zone. As a result, despite increasing inflation rates due to Russia-Ukraine war negatively affecting macroeconomic data, optimistic expectations continue for the future.

Aggressive monetary policies applied by the developed countries created a negative impact on the economies of the developing countries in 2022. Capital outflows were observed in developing countries and losses were seen in currency values of these countries. Moreover, increases both in energy prices and food prices due to Russia-Ukraine war negatively affected the growth of developing countries. In this context, central banks of developing countries continued to increase interests in 2022 to protect the value of their currencies and fight against inflation. Hence, monetary policies which will be implemented by the central banks of developed countries are closely monitored by the developing countries.

TURKISH ECONOMY

In 2022, economic activities recovered with strong demand in Turkish economy.

While economic growth gained speed, a clear improvement continued in employment rates. However, on a global scale, increased commodity prices and continuance of supply side problems caused by Russia-Ukraine war resulted in increased in inflation beyond expectations. Various macro interim measures and economic programs were implemented to take inflation increases under control and to support Turkish Lira.

While it is expected that economy will grow in the following period, temporary increase in inflation is expected to drop. Additionally, improvement process of current transactions balance with the impact of competitive TL is expected to continue in 2023.