Published on Tuesday, June 16, 2026

Türkiye Economic Outlook. June 2026

Summary

We expect the disinflation process to remain broadly on track against a softer growth backdrop in the short term. Persistent inflationary pressures and external uncertainties warrant a more cautious policy outlook, while selective easing is likely to continue within an overall restrictive policy mix.

Key points

Key points:
Global growth will be weaker than previously forecasted, particularly in Europe. However, a sharp slowdown will likely be avoided, assuming energy prices moderate from 2H26 and severe energy supply disruptions do not trigger non-linear effects.
In Türkiye, following the 2.5% y/y GDP growth in 1Q26, we observe further moderation in activity as of May, but not at an alarming level yet. It seems the authorities’ tendency to maintain growth at nearly 3% is largely being preserved, considering the CBRT's recent pause decisions, incentives for exporters, and new credit packages. Assuming a slight recovery in 2H26 amid a resolution in the Middle East conflict, we revised our GDP growth forecast to 3% for 2026 (previously at 4%).
High energy prices, supply chain disruptions, elevated inflation expectations and potential second-round effects have increased upside risks to the inflation outlook. Accordingly, we revised our year-end CPI forecast to 30%, following the April upward CPI surprise.
We expect the CBRT funding rate to gradually normalize in September and converge to the policy rate in October, which would remain at 37% by year-end. We keep our USD/TRY forecast at 52 (<2% m/m nominal depreciation) for end-2026. We expect higher real rates for longer with tougher macro-prudential measures to maintain a strong currency in the short term.
Given external financing constraints, we do not expect the fiscal deficit to deviate materially from the MTP target. However, weaker external demand and a higher energy import bill could lead to a wider current account deficit. We also present our latest analysis of Türkiye's structural current account dynamics, which may provide an important buffer against external shocks and heightened global uncertainty going forward.