Published on Monday, August 31, 2026

Türkiye | GDP grew by 2.5% y/y in 1H26

Summary

The Turkish economy grew by 2.3% y/y in 2Q26, below both our expectation (3%) and market consensus (2.9%), bringing growth in 1H26 to 2.5% y/y. Assuming a prudent policy mix going forward and no further escalation in geopolitical tensions, we maintain our 3.0% GDP growth forecast for 2026 with limited downside risks now.

Key points

Key points:
Despite the adverse supply shock stemming from the conflict and weakening domestic demand, the shift in external demand toward Türkiye supported growth in 2Q26. Industrial activity gained momentum, led by export-oriented sectors. While agriculture continued to contribute positively to growth, the contribution from services weakened, and the negative contribution from construction deepened.
The contraction in private consumption and government expenditures led to a further adjustment in domestic demand, while the relatively favorable performance of exports resulted in a positive contribution from net exports to growth. Demand conditions remain disinflationary; however, geopolitical uncertainties, persistent inflation inertia, and elevated inflation expectations appear to limit contribution to the disinflation process.
Leading indicators point to a weak outlook for industry in 3Q26, while we expect agriculture to remain supportive. Based on the data available so far, our monthly GDP indicator nowcasts an annual growth of around 3% in 3Q26, implying a quarterly growth in the range of 1.0–1.5%.
The CBRT has started easing as of late August by lowering the cost of funding by 300 bps. Although the move came earlier than expected, we expect the CBRT to maintain a prudent stance going forward, given the challenges to the inflation outlook. On the fiscal side, the Medium-Term Program, expected to be announced in early September, should provide a clearer picture of the fiscal policy stance.
We maintain our 3.0% GDP growth forecast for 2026 under the assumption of no further escalation in geopolitical tensions and a prudent policy mix going forward. However, the conflict in the Middle East remains a key downside risk to the outlook.