Türkiye Economic Outlook. November 2025

Summary

The global economy remains unstable but is faring better than expected. In Türkiye, we maintain our baseline with somewhat a restrictive policy mix in the short term; yet with a balance of risks evolving to a stickier inflation trend due to the prolonged process with more muted gains on expectations.

Key points

• Key points:
• Following a similar pace compared to our previous expectations, we maintain our GDP forecasts as 3.7% in 2025 and 4% in 2026, assuming that the output gap will remain negative throughout 2026.
• On monetary policy, we see a bias toward rate cuts from the CBRT, making it rely mostly on macro-prudential measures and more prone to missing the inflation targets. The negative fiscal impulse of this year (∼1pp of GDP) will likely turn neutral in 2026 and only limited support to disinflation might come from tax and administered price adjustments, if it occurs.
• After the worsening in inflation trend since August, we now expect year-end CPI to be nearly 32%, which has generated dynamic effects for our 2026 forecast and made us revise it to 25% by year-end (vs. 23%).
• Recent inflationary pressure requires a stronger currency and higher rates in the short term (we introduce no marginal changes in real rates). We now see USDTRY at 43 by end-2025 (vs. 45) and maintain our call of 52 by end-2026 (<2% m/m nominal depreciation) despite a higher inflation.
• Global financial volatility affecting risk appetite and demand for EM assets, Trump policies particularly impacting Europe, domestic uncertainties and stickier than expected inflation trend are near term risks.

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