Economic growth slows in the fourth quarter of 2025

GDP reading: Turkey's GDP expanded 0.4% on a seasonally adjusted quarter-on-quarter basis in Q4, following a 1.0% expansion in the prior quarter. Q4's reading was the weakest since Q2 2024. In annual terms, GDP grew 3.4% in Q4, following 3.8% growth in the previous quarter and below market expectations.

Broad-based slowdown: Relative to the prior quarter's data, readings in Q4 worsened for government consumption (-1.7% on a seasonally adjusted quarter-on-quarter basis vs +1.7% in Q3), fixed investment (-0.3% vs +3.7% in Q3) and exports of goods and services (-4.5% vs +2.7% in Q3). In contrast, readings picked up for private consumption (+4.2% vs +1.6% in Q3) and imports of goods and services (+4.3% vs -3.8% in Q3).

Panelist insight: On the data and outlook, ING’s Muhammet Mercan said: “Overall, the fourthquarter data confirms the expected loss of momentum on both an annual and quarterly basis. The dominance of domestic demanddriven growth, coupled with a continued negative contribution from net exports, indicates that further progress is needed to achieve the rebalancing targeted under the current economic program. Leading indicators for the first quarter – including PMI readings, capacity utilisation, and both consumer and realsector confidence indices – point toward an acceleration in growth.” EIU analysts said: “We anticipate little change in the pace of GDP growth in 2026. In our central scenario, the current anti-inflationary policies will partially limit domestic demand for goods and services, despite cuts in nominal interest rates as inflation edges downwards. Exporters and many sectors of industry will continue to struggle, and growth in construction may ease, but agricultural output should recover. The administration may adopt looser policies before the end of the year, with parliamentary and presidential elections due by May 2028 at the latest. However, the Iran war has brought added uncertainty. In the event of sustained higher global oil prices and pressure on the lira, the authorities may have to choose between tighter policies or higher inflation.”

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