Türkiye’s net financial gap narrows in 2024, remains moderate

The ratio of Türkiye’s net financial position deficit to its Gross Domestic Product (GDP) dropped by two percentage points in the fourth quarter of 2024, falling to 20.6% compared to the previous quarter, according to the Financial Accounts Report released by the Central Bank of the Republic of Türkiye (CBRT) on Friday.

In international comparisons, a net financial position deficit equivalent to around 20% of GDP places Türkiye within the typical range observed among emerging market economies. Many developing countries maintain similar or higher deficit levels due to ongoing capital needs and investment-driven growth models.

The report highlighted that, as of the end of the fourth quarter, the total financial assets of domestic sectors amounted to ₺125 trillion ($3.28 trillion), while their liabilities stood at ₺134 trillion.

An analysis of sector-specific net financial transactions shows that the economy, which had been a net borrower equivalent to 0.77% of GDP in the previous quarter, increased its borrowing to 3.13% of GDP during this period.

Households as creditors, firms and government in debt

When examining the financial balance sheets of domestic sectors, the overall economy remained in a net debtor position. In contrast, households and the rest of the world were net creditors, while non-financial corporations and general government continued to operate as net debtors.

Among household financial assets, cash and deposits accounted for the largest share, representing approximately 58% of the total. On the liabilities side, nearly all household debt stemmed from loans.

In the case of non-financial corporations, the primary components of both financial assets and liabilities were trade-related receivables and payables, which constituted 63% and 51%, respectively. These reflect business-to-business commercial transactions.

When compared to other countries, the indebtedness ratio of all sectors in Türkiye remained relatively low. The ratio of total debt—comprising loans and debt securities—to GDP stood at 90% in the final quarter of 2024, indicating a decrease from the previous quarter.