Turkey GDP Growth Slows More Than Expected

The Turkish economy expanded 3.7% year-on-year in Q3 2025, easing from an upwardly revised 4.9% growth in the previous quarter, and more than the expected slowdown to 4.2%. The main drag came from net trade, as exports fell 0.7% (vs. 2% in Q2) while imports rose 4.3% (vs. 8.9%). Meanwhile, household consumption growth accelerated (4.8% vs. 4.4%), fixed investments surged to their highest in two years (11.7% vs. 9.1%), and government spending rebounded (0.8% vs. -0.6%). On the production side, activity growth picked up in construction (13.9% vs. 11.1%), financial and insurance activities (10.8% vs. 4%), information and communication (10.1% vs. 7.1%), other services (7.1% vs. 2.5%), industry (6.5% vs. 6%), and trade, transport, accommodation, and food services (6.3% vs. 5.8%). Conversely, agriculture, forestry, and fishing fell 12.7% after a 5.5% decline previously. On a quarterly basis, GDP grew 1.1%, down from 1.6% in the previous period.

The Turkish economy grew 4.8% year-on-year in Q2 2025, the fastest pace since Q1 2024, outpacing market expectations of 4.1% and accelerating from a revised 2.3% in the previous quarter. The expansion reflected stronger household consumption (5.1% vs 1.6%), a surge in investment (8.8% vs 1.8%), and rising exports (1.7% vs 0.1%) and imports (8.8% vs 2.7%). In contrast, government spending contracted sharply (-5.2% vs 1.9%), dragging on overall growth. On the production side, growth was broad-based, led by construction (10.9% vs 8.6%), information and communication (7.1% vs 5.7%), real estate (2.6% vs 2.0%), and industry (6.1% vs -1.7%). However, agriculture (-3.5% vs -2.1%) and public services (-1.2% vs -0.1%) recorded deeper contractions. On a quarterly basis, GDP rose 1.6%, up from a revised 0.7% in the previous quarter.

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.