Turkish GDP Growth Weakest in 5 Years

The Turkish economy expanded 2% year-on-year in Q1 2025, the smallest growth rate since a contraction in Q2 of 2020, below a 3% rise in Q4 2024 and forecasts of a 2.3% increase.

Household spending (2% vs 3.9%), government expenditure (1.2% vs 1.6%) and investment (2.1% vs 6.1%) slowed significantly.

Also, exports stalled (vs -2%) and imports rose at a faster 3% (vs 1.6%).

On the production side, real estate activities accelerated (up 2.4% vs 1.3% previously), while growth in the services sector slowed (1.3% vs 3.2%), and the industrial sector contracted (-1.8% vs +1.4%).

Compared to the previous period, the GDP in Turkey rose 1%, following a 1.7% rise in the previous period.

The Turkish economy has been grappling with nearly two years of monetary tightening, which pushed borrowing costs as high as 50%.

Although the central bank began cutting interest rates in December, it reversed course and raised them again amid market turmoil following the arrest of Istanbul Mayor Ekrem Imamoglu.