Turkey: Economic growth decelerates in the third quarter of 2025 but remains solid
GDP reading: Turkey’s GDP grew 1.1% in seasonally adjusted quarter-on-quarter terms in Q3, following 1.6% growth in the previous quarter. On a year-on-year basis, the economy expanded 3.7% in Q3, following 4.9% growth in the prior quarter. Despite the slowdown, the economy continued to perform well relative to the Eastern European average. Moreover, the quarter-on-quarter expansion was more than double market expectations.
Drivers: Compared with the prior period’s data, the reading for imports of goods and services softened in Q3 (-4.4% in seasonally adjusted quarter-on-quarter terms vs +2.6% in Q2). In contrast, readings strengthened for private consumption (+2.1% vs -1.5% in Q2), government consumption (+1.3% vs -2.5% in Q2), fixed investment (+4.0% vs +3.0% in Q2) and exports of goods and services (+2.9% vs -2.9% in Q2).
Panelist insight: On the data and outlook, ING’s Muhammet Mercan said:
“Overall, despite the headline weakness in the third quarter, the seasonally adjusted quarterly pace has remained strong, defying previous expectations of a significant slowdown in momentum. This suggests upside risks to the growth outlook, especially amid ongoing monetary easing. […] Accordingly, we have raised our full-year GDP growth forecast for 2025 to 3.8%, up from the previous estimate of 3.4%. The growth outlook and still-elevated inflation will likely lead the central bank to keep rate cuts measured.”