Published on Wednesday, August 19, 2026

Türkiye | Growth could remain firm but unbalanced in 2Q26

Summary

In spite of the conflict, 2Q26 growth could surprise to the upside relative to our previous forecast as our monthly GDP indicator nowcasts 3.0% y/y growth for 2Q26, indicating a quarterly growth of around 1.0–1.5%. We keep our 2026 GDP growth forecast at 3.0%, with geopolitical tension as the key downside risk.

Key points

Key points:
Despite the conflict in Middle East, hard-data realization for 2Q26 surprised to the upside relative to our expectations, confirming the supportive industry, flat services and weakening construction. Meanwhile, July leading indicators provide some recovery signals for services and construction, while presenting weak outlook for industry.
Our monthly GDP indicator nowcasts annual growth of 3.0% for 2Q26 with the full information set, indicating a quarterly growth of around 1.0–1.5%.
Domestic demand softened visibly in 2Q26, with private consumption possibly retreating quarter-on-quarter: retail sales slowed sharply, services activity was flat, and consumer-goods imports contracted. Meanwhile, despite, still-weak underlying external demand, temporary factors supported a quarterly recovery in exports, while declining imports helped turn net exports’ contribution to both annual and quarterly growth positive in 2Q26.
Tight financial conditions led clear deceleration in consumer lending and private consumption, providing stronger support to disinflation process. However, risks remain elevated amid geopolitical-driven energy price volatility, persistent inflation inertia, and elevated inflation expectations. Uncertainty over the energy price outlook also poses risks to the external balance and financial stability, limiting the scope for significant fiscal policy support to activity.
Under our baseline scenario of gradually normalizing energy prices and a prudent policy mix, 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 and disruptions in supply chains while the likelihood of better than expected momentum in 2Q26 could be a buffer.