Economic and Consumer Confidence in Turkey

Türkiye – Economic Overview

Türkiye’s economy remains resilient amid global uncertainty and ongoing domestic rebalancing. After expanding by 5.1% in 2023 and slowing to around 3.2% in 2024 as tighter fiscal and monetary measures curbed domestic demand, GDP growth is projected at 3.1% in 2025 and 3.9% in 2026, supported by gradual disinflation and improving external conditions. Real GDP expanded by 4.8% in Q2 2025, driven by robust industrial performance and recovering private investment. Türkiye’s GDP at current prices reached $0.72 trillion by mid-2025 and is expected to climb to approximately $1.40 trillion by year-end, up from $1.36 trillion in 2024, reflecting stable real growth despite tight policy conditions.

Macroecomnic Indicators of Turkey

Growth and Sectoral Composition of GDP

The growth composition shows a clear transition toward services-led expansion. Based on 2025 national accounts, services accounted for 58.2%, industry for 18.3%, and agriculture for 2.7% of total GDP. Within services, trade, transport, accommodation, and food activities (23.9%) remained the key growth driver, followed by real estate (9.1%), public administration, education, health and social work (9.1%), and financial services (5.9%). Manufacturing continued to underpin industrial output, contributing 15.6% of GDP, led by automotive, textiles, food, and metal industries, while construction regained momentum at 5.2%.

Source

Industry

Total industrial output rose 8.3% year-on-year, with manufacturing up 9.5%, marking the strongest half-year performance since 2022. On average, industrial output grew around 6–7% in the first half of 2025, reflecting Türkiye’s ability to sustain real-sector momentum under tight financing and weak global demand.

External Sector and Tourism

External trade remained mixed but resilient. In the first five months of 2025, exports reached USD 110.9 billion, up 3.4% year-on-year, while imports increased 5.8% to USD 152.2 billion, widening the trade deficit to USD 41.3 billion. July 2025 exports hit a record USD 25.0 billion, with services exports estimated at USD 11.8 billion, narrowing the deficit. Tourism, accounting for roughly 12% of GDP, continues to outperform expectations: 2024 tourism revenues rose 8.3% year-on-year to USD 61.1 billion, underlining the sector’s growing role in foreign exchange earnings and employment.

Confidence and Labour Market

Confidence indicators point to moderate optimism. The Economic Confidence Index averaged 98 points in 2025 (January–September), up from 97 in 2024. Consumer confidence improved from 79 to 84, while real-sector confidence held steady at 101. Service and retail confidence eased slightly to 112 and 111, respectively, and construction to 88, reflecting more cautious sentiment amid high borrowing costs. Overall, confidence levels below the 100 neutral threshold suggest cautious optimism, but the steady rise in household and corporate expectations reflects improving faith in macroeconomic management.

Sources

Labour market conditions remain a bright spot. In March 2025, employment rose to 32.6 million (an increase of 391,000) and the employment rate reached 49.2%. The seasonally adjusted unemployment rate was recorded at 8.4% in May 2025, with male unemployment at 6.5% and female at 11.9%.

Inflation and Monetary Policy
Inflation remains Türkiye’s primary challenge but shows clear signs of deceleration. The annual consumer price index rate growth eased from 58.5% in 2024 to 33.3% in September 2025, driven by cooling domestic demand and improved supply dynamics. Monthly inflation slowed to 3.2%, while OECD forecasts project headline inflation to fall from 31% in 2025 to below 19% in 2026, nearing 15% by late 2026. The Central Bank of the Republic of Türkiye (CBRT) maintained a tight policy stance while initiating measured easing. On 11 September 2025, the Monetary Policy Committee cut the one-week repo rate from 43% to 40.5%, reaffirming its commitment to preserve monetary tightness “until price stability is achieved”. The Bank highlighted a data-driven approach, signalling that any future easing would hinge on inflation expectations and progress toward interim disinflation goals.

Exchange Rate and Long-Term Outlook
Exchange-rate dynamics remain pivotal for investor sentiment. The Turkish lira traded near ₺41.7 per USD in early October 2025, following a volatile 2023–2024 period. Supported by high interest rate differentials, reserve accumulation, and moderated external borrowing, the lira’s stability has limited imported inflation and strengthened investor confidence. Türkiye’s medium-term outlook is shaped by ongoing fiscal discipline, demographic vitality, and structural transformation. The government’s Medium-Term Program (2025–2027) targets inflation below 15% by 2026 and a sustainable growth path driven by green energy, manufacturing innovation, and export diversification. Expanding renewable energy capacity, integrating into EU and MENA supply chains, and accelerating digitalisation of SMEs are expected to raise productivity and attract long-term FDI inflows. Demographic advantages, with a young, urbanising population, continue to underpin domestic consumption and labour supply. Türkiye’s strategic position as a logistics and energy hub between Europe, Asia, and the Middle East, combined with a resilient private sector, supports its ambition to sustain 4–5% real growth over the next decade. For investors, these reforms and macro-stabilisation efforts point toward a more predictable policy environment and a deep, diversified market capable of outperforming many emerging peers.

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