Published on Wednesday, July 22, 2026

Türkiye | GDP growth could be around 2.5% y/y in 1H26

Summary

Despite the drag from the conflict, we expect GDP growth to reach around 2.5% in the first half of 2026. Under our baseline scenario of gradually normalizing energy prices and a prudent policy mix, we maintain our 2026 GDP growth forecast at 3.0%.

Key points

Key points:
Despite the conflict in the Middle East, industrial production remained relatively resilient in 2Q26, while services activity was broadly flat and construction continued to weaken. June leading indicators suggest that firms’ forward-looking expectations have improved, supported by growing hopes for a peace agreement in the Middle East.
Our monthly GDP indicator nowcasts annual growth of 2.3% as of June, based on 40% of the available information, implying a quarterly growth of around 0.5–1.0%.
On the demand side, domestic demand continues to moderate. The clear slowdown in retail sales, stagnant services output, and the quarterly contraction in private consumption goods imports all point to weaker consumption. Meanwhile, temporary factors drove a quarterly rebound in exports and a decline in imports on weaker domestic demand, suggesting that net exports will make a positive contribution to growth in 2Q26.
Demand conditions are becoming more supportive of disinflation, but geopolitical risks, inflation inertia, elevated inflation expectations, and energy price volatility continue to cloud the outlook. At the same time, volatile energy prices pose risks to the external balance, reinforcing the delicate trade-off between supporting growth and preserving financial stability. As a result, we expect only limited fiscal support for activity and a gradual monetary easing cycle.
Under our baseline scenario, we maintain our 2026 GDP growth forecast at 3.0%. The main downside risk remains the renewed escalation in geopolitical tensions leading to a sharper rise in energy prices, while faster-than-expected monetary easing represents a modest upside risk. Overall, we see risks to the growth outlook as broadly balanced.