Hard and leading data indicate a quarterly GDP growth slowing down to 0.5–1.0% q/q in 3Q25 (vs 1.6% q/q in 2Q), driven by weakening signals in domestic demand. 2025 GDP growth will likely be in the range of 3.5–4%, so we evaluate the risks on our growth forecast of 3.7% as balanced.

Our baseline scenario assumes the continuation of the restrictive policies prioritizing disinflation in the short term. Global financial volatility affecting demand for EM assets, Trump policies particularly impacting Europe, and increasing domestic unknowns are near term risks on the Turkish economy, keeping us cautious.