Turkish Growth to Rebound Next Year: European Commission

The commission expects the Turkish economy to expand by 2.8 percent this year and 3.5 percent in 2026.

Household consumption is forecast to grow moderately at around 3.5 percent, supported by further improvements in households’ current and expected financial situation, said the report.

Domestic political and financial market turmoil is forecast to lower economic growth and slow down the pace of disinflation, according to the commission.

Inflation is forecast to decline further, helped by tight monetary and fiscal policy and lower prices of energy, it added.

The report warned that a cold spell in the spring damaged some crops, posing a risk for food inflation in 2025, adding that although on a downward trend, inflation is forecast to remain elevated in the double-digits in the next two years.

Inflation is expected to decline to 22.7 percent next year from a 36.3 percent projected for 2025, according to the report.

Export growth is forecast to remain subdued, suppressed by the real appreciation of the lira and lower external demand, while gains due to trade diversion, triggered by the increased U.S. tariffs, are expected to be limited, it added.

The Turkish economy has been battling very high geopolitical and domestic risks for several years, the commission said, noting that the risk environment has worsened in early 2025 but is better positioned to face it than in previous years due to a sound policy mix, lower imbalances and the build-up of buffers.

Source: HDN