Publications

Hard data confirmed a soft landing in 2Q25, while early 3Q25 indicators still signal weakness in activity. We maintain our 2025 GDP forecast at 3.5% for now, though risks are slightly tilted to the downside.

Hard data realizations so far confirm the slowdown in activity in 2Q25 while domestic demand conditions continue to moderate. We maintain our 2025 GDP growth forecast of 3.5% despite the downside risks, assuming an effective policy mix targeting a smooth adjustment.

Turkish economy grew by 5.7% y/y in 1Q above the market consensus of 5.5% but lower than our expectation of 6%. Given the strong performance of 1H24 and lagged effects of expected fiscal consolidation and monetary policy, risks start to be tilted to the upside for our 2024 GDP forecast of 3.5%.

Industrial production (IP) fell by 1.4% m/m in seas. and cal. adj. series, while increasing by 0.2% y/y on calendar adjusted terms. GDP growth will likely materialize closer to 4.5% in 2023 but decelerate to 3-3.5% in 2024 led by monetary tightening and poor foreign demand.

Industrial production (IP) increased by 1.6% m/m in seasonal and calendar adjusted series, resulting in the 2.3% q/q acceleration of activity in 2Q (vs. 0.5% q/q in 1Q). We expect GDP growth to be 4.5% in 2023 thanks to the strong growth pattern in 1H23, especially considering the soft landing scenario.

Industrial production (IP) decreased by 0.2% y/y in cal. adj. series while unadjusted figure increased by 11.3% in May. We forecast GDP growth to be 4.5% in 2023, led by expected gradual normalization steps in monetary policy, whereas the growth in 2024 will depend on the stance of policies against inflation.

Industrial production (IP) rapidly recovered in March increasing by 5.5% m/m (1.8% m/m cons.), mostly wiping out the impact from the earthquakes. Recent better than forecasted momentum and potential continuation of populist policies after elections put upside risk on our 2023 growth forecast of 3%.

Industrial production (IP) deteriorated sharply in Feb. contracting by 6.0% m/m on seas. and cal. adj. series, contrary to consensus (+2% m/m exp.). Considering recovery signaled by our nowcasts and assuming gradual policy normalization after the elections, we expect GDP to grow 3% in 2023 but risks remain on the upside.