Turkey’s Latest GDP Growth Rate YoY: A Data-Driven Analysis and Macro Outlook
Turkey’s GDP growth slowed to 3.70% YoY in December 2025, below estimates and prior prints. This reflects cooling momentum amid tighter monetary policy, fiscal consolidation, and external headwinds. Structural reforms and geopolitical risks cloud the outlook, while financial markets show mixed signals. Bullish, base, and bearish scenarios highlight a cautious path forward.
Table of Contents
Turkey’s GDP growth rate for December 2025 came in at 3.70% year-on-year, according to the latest release from the Sigmanomics database. This figure undershot the consensus estimate of 4.20% and marked a decline from the previous 4.80% reading in September 2025. Over the past 12 months, growth has shown volatility, swinging from a high of 5.90% in November 2023 to a low of 2.00% in May 2025.
Drivers this month
- Domestic consumption growth slowed amid rising inflation and tighter credit conditions.
- Export volumes remained resilient but were offset by weaker investment spending.
- Government infrastructure projects provided some support but at a slower pace than earlier quarters.
Policy pulse
The Central Bank of the Republic of Turkey (CBRT) has maintained a restrictive monetary stance, with policy rates above 15%, aiming to rein in inflation running near 40%. This growth print aligns with the central bank’s goal of tempering overheating but raises concerns about growth sustainability.
Market lens
Immediate reaction: The Turkish lira (TRY) weakened 0.50% against the USD within the first hour, while the BIST 100 index dipped 1.20%. Short-term yields on Turkish government bonds rose by 15 basis points, reflecting investor caution.
Core macroeconomic indicators provide context for the GDP growth slowdown. Inflation remains elevated at 39.80% YoY as of November 2025, constraining real income growth. Unemployment stands at 11.50%, slightly improved from 12.30% a year ago but still high by regional standards. The current account deficit widened to 4.50% of GDP, pressured by energy imports and geopolitical tensions.
Monetary Policy & Financial Conditions
The CBRT’s tight monetary policy has pushed benchmark rates to 15.50%, up from 14.00% six months ago. Credit growth has decelerated to 8% YoY from 15% a year prior, reflecting cautious bank lending. Inflation expectations remain elevated, complicating the policy outlook.
Fiscal Policy & Government Budget
Fiscal consolidation efforts have reduced the budget deficit to 3.80% of GDP from 5.20% last year. However, public debt remains high at 42% of GDP, limiting fiscal space. Government spending on social programs and infrastructure continues but at a moderated pace.
External Shocks & Geopolitical Risks
Ongoing regional instability and sanctions on key trade partners have disrupted supply chains and dampened investor confidence. Energy price volatility and currency depreciation add to external vulnerabilities.
Drivers this month
- Weaker investment growth (-0.40 pp contribution) due to higher borrowing costs.
- Exports contributed 0.80 pp, supported by a competitive TRY exchange rate.
- Private consumption slowed, subtracting -0.30 pp amid inflationary pressures.
Policy pulse
The growth rate remains below the CBRT’s target range, reinforcing the need for continued monetary restraint. Inflation targeting remains the priority, with growth a secondary concern.
Market lens
Immediate reaction: The TRY/USD exchange rate depreciated by 0.50%, while the 2-year government bond yield rose by 15 basis points. Equity markets reacted negatively, with the BIST 100 index down 1.20%, reflecting investor caution about growth prospects.
This chart signals a clear trend of slowing growth after a mid-2024 peak. The economy is navigating a delicate balance between inflation control and growth support. The downward trajectory suggests risks of stagnation if external and domestic headwinds persist.
Looking ahead, Turkey’s GDP growth faces a complex set of influences. The baseline scenario projects growth stabilizing around 3.50% in 2026, assuming continued monetary tightening and moderate fiscal support. Inflation is expected to gradually decline but remain above 20% through mid-2026.
Bullish scenario (20% probability)
- Geopolitical tensions ease, boosting exports and investment.
- Inflation falls faster than expected, enabling rate cuts.
- Structural reforms attract foreign direct investment, lifting growth above 5%.
Base scenario (60% probability)
- Monetary policy remains tight but stable.
- Fiscal consolidation continues cautiously.
- Growth hovers near 3.50%, with inflation slowly declining.
Bearish scenario (20% probability)
- External shocks worsen, including energy price spikes and sanctions.
- Inflation remains sticky above 30%, forcing further tightening.
- Growth slows below 2%, risking recessionary pressures.
Turkey’s latest GDP growth print of 3.70% YoY reflects a cooling economy amid persistent inflation and external challenges. While the slowdown is partly by design through tighter monetary policy, risks remain skewed to the downside. Structural reforms and geopolitical developments will be key to shaping the medium-term trajectory. Financial markets have reacted cautiously, signaling uncertainty about growth sustainability.
Investors and policymakers should monitor inflation trends, credit conditions, and external developments closely. The balance between growth and price stability remains delicate, with potential for volatility in the near term.
Key Markets Likely to React to GDP Growth Rate YoY
The GDP growth rate is a critical indicator for Turkey’s economic health, influencing currency, equity, and bond markets. Key tradable assets historically sensitive to Turkey’s growth dynamics include the Turkish lira (TRY), the BIST 100 equity index, and select global commodities and currencies linked to emerging markets.
- USDTRY – The USD/TRY currency pair often reacts sharply to growth data, reflecting shifts in investor confidence and monetary policy expectations.
- BIST100 – Turkey’s main equity index is sensitive to growth prospects and foreign investment flows.
- AKBNK.IS – Akbank shares correlate with domestic economic activity and credit conditions.
- BTCUSD – Bitcoin’s role as a risk asset sometimes reflects emerging market sentiment shifts, including Turkey.
- EURTRY – The euro/Turkish lira pair tracks regional trade and monetary policy differentials.
Insight: GDP Growth vs. USDTRY Exchange Rate Since 2020
Since 2020, Turkey’s GDP growth rate and the USD/TRY exchange rate have shown an inverse relationship. Periods of slowing growth often coincide with TRY depreciation, as seen in 2023 and mid-2025. This dynamic underscores the sensitivity of the currency to economic fundamentals and policy shifts. Monitoring this correlation helps anticipate currency moves following GDP releases.
FAQ
- What does Turkey’s GDP Growth Rate YoY indicate?
- Turkey’s GDP Growth Rate YoY measures the annual percentage change in economic output, reflecting the country’s economic health and momentum.
- How does the latest GDP growth affect Turkey’s monetary policy?
- The 3.70% growth rate suggests a cooling economy, supporting the central bank’s tight monetary stance to control inflation.
- What are the risks to Turkey’s GDP growth outlook?
- Risks include persistent inflation, geopolitical tensions, external shocks, and limited fiscal space, which could slow growth further.
Key takeaway: Turkey’s economy is slowing amid inflation and external pressures, requiring careful policy calibration to sustain growth without fueling price instability.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.









The December 2025 GDP growth rate of 3.70% contrasts with the September 2025 figure of 4.80% and the 12-month average of 3.90%. This marks a deceleration after a brief rebound in early 2025. The trend highlights a moderation in economic activity amid tightening financial conditions and external pressures.
Comparing historical data, the 3.70% print is below the 5.90% peak in November 2023 and the 4.00% reading in February 2024, signaling a loss of momentum. The lowest point was 2.00% in May 2025, indicating some recovery since then but still below earlier highs.