Since the beginning of 2024, discussions regarding the new legal framework concerning crypto assets in Turkey have surfaced despite it not being among the foremost topics of the economic agenda. Following the recent Economic Coordination Board meeting, Vice President Cevdet Yılmaz announced that efforts towards the new cryptocurrency legislation are underway, even specifying a timeframe. Yılmaz indicated that the legislation will be among the parliament's top priorities in April, immediately following the local elections scheduled for March 31. Consequently, the forthcoming crypto law has begun to emerge on the horizon.Public awareness of the law's specifics remains primarily confined to broad definitions. What is known publicly is that the law will adopt a regulatory role. However, the extent to which this regulation will reach beyond the legal definition of crypto assets is a significant question mark. One of the critical reasons why crypto investors are drawn to this alternative is the decentralized nature of cryptocurrencies and the market. Consequently, the notion of "centralized supervision" contradicts the essence of cryptocurrencies. While this requirement could potentially be met through specific licensing obligations, it is expected that regulation should minimally impede investors' activities.Cryptocurrency regulation presents Turkey with crucial junctures. On one hand, the drive to exit the FATF's "Gray List" is deemed the foremost imperative of these regulations. This is a legitimate evaluation, given that cryptocurrencies present diverse challenges and opaque areas in terms of complying securely with FATF requirements.Simultaneously, cryptocurrencies remain an investment avenue for numerous economic entities in Turkey and globally. Consequently, measures taken solely to fulfill FATF requirements risk disregarding the essence and dynamics of crypto markets entirely. This could potentially constrict the economic landscape for crypto investors, particularly those residing in Turkey. To avert this, the needs of investors should be considered at least as attentively as those of the FATF.As such, following the elections, the legislator in Turkey faces a delicate balancing act that will directly impact market dynamics and economic activities. At present, we can only await the correct calibration of this delicate scale. <hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;"> [1] Ceza Muhakemesi Kanunu ile Bazı Kanunlarda ve 659 Sayılı Kanun Hükmünde Kararnamede Değişiklik Yapılmasına Dair Kanun Teklifi, şuradan erişilebilir: &nbsp;https://cdn.tbmm.gov.tr/KKBSPublicFile/D28/Y2/T2/WebOnergeMetni/6e8b6477-2942-49d1-acf1-cfa13bcac252.pdf[2] AYM, E.2022/120, K.2023/107, 01/06/2023.[3] Işıkırık/Türkiye, no. 41226/09, 14.11.2017&nbsp;[4] Hamit Yakut [GK], B. No: 2014/6548, 10/6/2021; AYM, E.2023/132, K.2023/183, 26/10/2023

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As such, following the elections, the legislator in Turkey faces a delicate balancing act that will directly impact market dynamics and economic activities. At present, we can only await the correct calibration of this delicate scale.

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In these bulletins, we typically assess the economy in the context of corporate developments. However, in this final bulletin of the year, we will delve into the economic data for 2024 and offer recommendations based on reports from research institutions and international organizations.The year 2023 posed significant challenges for the Turkish economy. Global economic events, particularly the Russia-Ukraine conflict, exerted adverse effects on Turkey. In tandem with risks stemming from previous economic management, inflation continued its upward trajectory. In 2024, the performance of the Turkish economy will be contingent upon developments in the global economy and domestic policies in Turkey. Nevertheless, we anticipate a general slowdown in growth, persistently high inflation, and an increase in unemployment.Economic Growth:In 2023, the Turkish economy is projected to grow by 4.5%. This marks a significant deceleration compared to the 11.1% growth achieved in 2022. The sluggishness in the global economy and uncertainties in domestic policies may lead to a further slowdown, with growth expected to reach 2.9% in 2024.Inflation:In 2023, inflation in Turkey surged to over 60%, and the anticipated decrease did not materialize. High inflation rates in the global economy, coupled with uncertainties in domestic policies, suggest that inflation is poised to remain elevated in 2024.Unemployment:In 2024, Turkey's unemployment rate is anticipated to surpass 15%, negatively impacting household welfare. The rising unemployment is expected to have an even more pronounced adverse effect since an increase in labor force participation is not foreseen. Furthermore, high inflation and escalating financing costs are likely to contribute to an economic growth slowdown, resulting in higher unemployment.Rule of Law:The erosion of the rule of law can lead to a decline in investment security and a slowdown in economic growth. In 2024, challenges related to the rule of law are projected to persist, making it increasingly challenging for the Turkish economy to attract foreign investment. Recommendations for the Government of TurkeyThe Turkish government needs to take the following steps to overcome the challenges it will face in 2024:To adapt to the slowdown in the global economy, undertake structural reforms to improve the efficiency and competitiveness of the Turkish economy:Continue raising interest rates and tightening fiscal policy to reduce inflation:Rate hikes will help reduce inflation by lowering inflation expectations.Fiscal policy tightening will help reduce inflation by reducing public spending and increasing tax revenues. Reducing indirect taxes and increasing the share of direct taxes in total tax revenues could bring about a significant improvement.Create Jobs and Regulate the Labor Market to Reduce Unemployment:To achieve this objective, the Turkish government could implement policies aimed at fostering investment, enhancing workforce qualifications, and regulating the labor market.Strengthening the Rule of Law:To achieve this goal, the Turkish government could implement policies aimed at:Ensuring the independence of the judiciary, ensuring the equal application of the law to all citizens, and reducing corruption.In 2024, the Turkish economy is expected to go through another challenging period due to the slowdown in the global economy and uncertainties in domestic policies. This will negatively affect the ability of the Turkish economy to generate prosperity and remain competitive. The steps that the Turkish government will take to overcome these challenges are critical for the future of the economy. <hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;"> 1 Şerafettin Can Atalay (3) [GK], B. No: 2023/99744, 21/12/2023, Şuradan erişilebilir: https://kararlarbilgibankasi.anayasa.gov.tr/BB/2023/997442&nbsp;https://www.gazeteduvar.com.tr/bahceli-dem-partili-milletvekillerinin-maasi-kesilsin-aym-kapatilsin-haber-1656737

In 2024, Turkey's unemployment rate is anticipated to surpass 15%, negatively impacting household welfare. The rising unemployment is expected to have an even more pronounced adverse effect since an increase in labor force participation is not foreseen. Furthermore, high inflation and escalating financing costs are likely to contribute to an economic growth slowdown, resulting in higher unemployment.

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