World Bank raises Turkish GDP growth forecast for 2025

ISTANBUL

The World Bank revised upward its GDP growth forecast for the Turkish economy for 2025 from 2.6 percent in January to 3.1 percent in its Economic Update for Europe and Central Asia.

The bank, however, lowered its growth estimate for 2026 from 3.8 percent to 3.6 percent.

Growth in Türkiye is likely to stabilize at 3.3 percent on average in 2025–26, well below its long-term trend, more than 2 percentage points slower than in 2010–19, reflecting sluggish external demand and tight policies, it said.

The general government deficit is expected to remain largely unchanged, at about 5 percent of GDP, as spending on compensation of employees more than doubled and interest payments reached almost 3 percent of GDP, according to the bank.

Manufacturing output has been struggling to grow since the start of the policy tightening cycle that began in June 2023, it noted.

Tighter monetary policies Türkiye have also dampened credit demand, leading to a slowdown in household credit growth, it said, adding that credit to households fell by 5.6 percent on average in 2024 after adjusting for inflation, compared to average real credit growth of over 26 percent in 2023.

The Turkish growth is projected to bottom out in 2025 at 2.7 percent and accelerate to 3.2 percent in 2026, owing to recent pivots in monetary policy, the IMF said earlier this week in its World Economic Outlook (WEO).

In January, the IMF forecast GDP growth rates of 2.6 percent for this year and 3.2 percent for the next.

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