As of September 3, 2025, Turkey’s economy shows both progress and ongoing problems. While some sectors are expanding rapidly, other areas face continued issues. Updated projections for 2025 are generally positive. For example, the World Bank increased its growth forecast for Turkey to 3.1% this year, up from a previously estimated 2.6%. Likewise, BBVA Research expects Turkey’s economy to grow by 3.5% in 2025. Early 2025 data supports this optimism: Reuters reported a 2.3% economic growth in the first quarter and TurkStat noted an impressive 4.8% expansion in the second quarter, both above most expectations.
Still, there are big concerns, especially about inflation. The Turkish Central Bank has moved to more traditional policies since mid-2023, helping bring down inflation from a peak of 85.5% in late 2022 to 42.1% at the start of 2025. Despite this, year-end 2025 inflation is expected to be around 33.5% (IMF) or 31% (BBVA). Careful government spending and strict monetary policies will be key in reducing inflation while keeping the economy stable. Finding the right balance between encouraging growth and controlling prices is still the main challenge in Turkey’s 2025 economic outlook.
Turkey’s Economic Outlook in 2025
Turkey is considered an emerging market and a newly industrialized country, showing strong resilience. Its varied economy has consistently been among the fastest-growing in the OECD over the last ten years, averaging 4.9% growth per year. This progress has helped improve both the job market and living conditions, with average incomes rising nearly four times since the early 2000s.
The outlook for 2025 combines ongoing growth with important policy changes. Since its recovery after the 2018 downturn, Turkey has rebounded well, especially since 2021. The focus in 2025, though, is shifting from just growth to tackling inflation and other key issues. By sticking to standard monetary policies and controlling government spending, Turkey hopes to secure steady and reliable growth.
Key Economic Indicators and Projections
Some major data points for Turkey in 2025 include:
- Nominal GDP: $1.437 trillion (16th in the world)
- GDP (PPP): $3.614 trillion (12th in the world)
- Nominal GDP per capita: $16,709
- GDP (PPP) per capita: $42,451
These numbers show that Turkey is a major economic force, especially in Europe, where it ranks 7th by nominal GDP and 5th by purchasing power parity (PPP).
The economic scene is always changing. In 2024, growth slowed to 3.2%, according to the World Bank, because of higher interest rates to fight inflation. These policies worked, as inflation dropped sharply. For 2025, most expect moderate but steady growth, with ongoing policy changes aimed at improving stability.
GDP Growth Forecasts for 2025
| Institution | 2025 GDP Growth Forecast |
|---|---|
| IMF | 2.7% |
| World Bank | 3.1% |
| BBVA Research | 3.5% |
Although each organization has a slightly different projection, all expect Turkey’s economy to keep growing. The first half of 2025 has shown strong results, with 4.8% growth in the second quarter, according to TurkStat, suggesting solid momentum even with tighter credit conditions.
Inflation Rates and Currency Stability
| Date/Forecast | CPI Inflation Rate |
|---|---|
| Late 2022 | 85.5% |
| Early 2025 | 42.1% |
| Late 2025 (IMF) | 33.5% |
| Late 2025 (BBVA) | 31% |
High inflation continues to hurt household buying power. The Central Bank is using higher interest rates to bring inflation down further. The stability of the Turkish lira also depends on these efforts. BBVA Research expects the lira to be at 45 TRY per US dollar by the end of 2025, but warns this could change if inflation does not drop as planned.
Comparison with Previous Years
Turkey’s recent economic history has seen ups and downs. The 2000s brought strong growth, but 2018 was a tough year. After a recovery starting in 2021, Turkey reached record GDP numbers in 2023 and 2024. For 2025, growth is steady but more moderate, as the government prioritizes stability over rapid expansion to avoid past mistakes and get ready for more sustainable progress.
Major Drivers of Turkey’s Economy in 2025
Turkey’s growth is backed by a wide range of industries, showing strength in manufacturing, agriculture, construction, and services. Its geographic position and large domestic market help these sectors to thrive.
Industrial Sector Performance
- Manufacturing made up 22.1% of GDP in 2022.
- Key outputs: vehicles, electronics (e.g., Vestel, Beko), home goods, defense products.
- Automotive players: Fiat/Tofaş, Oyak-Renault, Hyundai, Toyota, Ford/Otosan.
- Emerging defense projects: TAI TF Kaan fighter and TCG Anadolu carrier.
In the second quarter of 2025, industry grew by 6.1%. High-tech production and R&D investment continue to be important for this sector’s future growth.
Agricultural Output and Trends
- Turkey is among the world’s top ten agricultural producers.
- Main products: wheat, hazelnuts, apricots, oregano, sugar beet, milk, poultry, cotton, fruits, vegetables.
- Exports a large share to the EU, but imports wheat despite large output.
The agricultural sector shrank by 3.5% in Q2 2025 as reported by TurkStat, pointing to ongoing challenges like weather and world market prices. Nearly 15% of Turks work in agriculture, which still contributes over 5% of GDP.
Construction and Contracting Industry
- 39 Turkish companies were in the Top 250 International Contractors (2016).
- Over 11,605 international projects completed since the 1970s.
- 2022 overseas contract volume: $472 billion.
- Sector output grew by 10.9% in Q2 2025.
Building safety, especially after the 2023 earthquakes, remains a serious concern, calling for better enforcement of standards. Still, the industry remains a key driver for both domestic and foreign projects.
Services and Tourism Recovery
- Services made up 58% of all jobs in 2023.
- Tourism contributed 12% to GDP in 2023, with 55.2 million visitors.
- Health tourism, especially for cosmetic procedures, is growing.
- The “Trade, transportation, accommodation and food services” sub-sector increased by 5.6% in Q2 2025.
Tourism and related services continue to recover, helping job creation and foreign currency earnings.
Banking and Financial Services
- 48 banks operating with over $800 billion in total assets (2020).
- Main authorities: Central Bank (CBRT) and major state banks now based in the Istanbul Financial Center.
- Strong sector after the 2008 crisis, with a steady increase in loans, though foreign currency deposits make up a large share.
- Measures in 2025 improved bank profits and helped capital, even as high rates slowed loan growth.
Natural Resources and Energy Developments
Turkey has many minerals (boron, chromium, antimony, gold, etc.) supporting industry. But for energy, it mainly relies on imports, which affects its trade balance.
Role of Fossil Fuels: Gas, Oil, and Coal
- Natural gas: over 25% of energy use, mostly imported (50-60 bcm yearly).
- Oil: makes up another quarter, with most supplies imported, mainly from Russia.
- Coal: about a quarter of primary energy, more than a third of electricity, heavily subsidized but causes air pollution.
- Big new Black Sea gas field started up in 2023; could reduce imports over time.
The energy import bill is high, with an energy trade deficit above $80 billion in 2022. Shifting to local and cleaner energy sources is becoming more important.
Renewable Energy Expansion in 2025
- Over 50% of installed electricity generation now comes from renewables.
- Hydropower is the biggest renewable source, then wind and geothermal.
- Solar power potential is high but not fully used yet.
- Push for new wind and solar projects, backed by EU and special financing programs.
- Plans for more hybrid plants and battery storage.
Cheaper new wind and solar make coal less attractive. There’s a move from fixed support (feed-in tariffs) for renewables to a more market-driven approach to boost investment.
Turkey’s External Trade and Investment in 2025
Turkey benefits from its location and many trade agreements. EU Customs Union, WTO membership, and deals with 22 countries make it a key global trade hub. However, 2025 has seen more global trade tension that could slow exports. Turkey’s varied exports help soften these risks.
Export and Import Trends
| Year | Exports | Imports | Trade Deficit |
|---|---|---|---|
| 2024 | $261.9bn | $344.1bn | -$82.2bn |
- Main export goods: vehicles, machinery, apparel, electronics, food, textiles, and plastic.
- EU is top export partner (41.5%), then USA (6.2%), UK (5.8%), Russia (5.0%), and Iraq (3.3%).
- Key imports: fuels (oil, gas), machinery, chemicals, transport equipment.
- EU is also main import partner (32.1%), followed by China and Russia.
The gap stays large due to high fuel imports, even though exports remain strong. The trade deficit narrowed by 23% in 2024 but may widen again as growth and import demand rise.
Foreign Direct Investment Flows
- As of end-2017, Turkey had $180.3 billion in FDI.
- Ease of doing business ranking improved from 68th (2017) to 33rd (2020).
- In 2024: FDI flows were $4.7 billion; portfolio flows rose to $12.0 billion.
Encouraging more FDI remains a top goal, as steady investment is needed to fuel growth and modernize industries. Reducing red tape, making services more open, and expanding tax coverage would help bring in more capital.
Key Trading Partners and Geopolitical Impacts
- Main partners: EU, Russia, USA, China, and other neighbors in the Middle East.
- Strong energy ties with Russia despite political tensions.
- Geopolitics and protectionist measures in world trade can affect exports, as can new EU green regulations (starting 2026).
Adjusting Turkish environmental laws to international standards will help exports keep up with new rules.
Employment, Wages, and Social Trends
Jobs and social conditions are important for understanding Turkey’s economic health. The workforce was about 34.8 million in 2023. Most people now work in services (58%), followed by industry (20.8%) and agriculture (14.8%). Average incomes and employment have grown since 2000, but challenges remain, including high unemployment among young people and income inequality.
Unemployment Rates and Workforce Challenges
- Overall unemployment in 2023: 8.5% (youth: 16.3%)
- Regional differences: Hakkari (23.3%), Sinop (4.8%)
- Broad unemployment (including underemployment) was 28.4% in early 2025.
Women participate less in the labor force than in other OECD countries, mainly because of unpaid care work. Solutions include more childcare, better family support, and flexible work options. The emigration of skilled workers also adds to workforce gaps.
Wage Growth and Income Inequality
- Minimum wage (Jan 2025): ₺22,104 per month (~$630)
- Average gross wage (2024): ₺47,346/month (€1,334); net: ₺33,913 (€956)
- Poverty rate expected to drop to 4.9% in 2025
- Gini coefficient: 44.8 in 2024; 14.4% below poverty line (2022)
Improving tax fairness and social support for low-income families, especially with direct payments for children, would help reduce gaps and make growth more inclusive.
Challenges Facing Turkey’s Economy in 2025
Turkey’s economy in 2025 still faces important problems, especially high inflation, external debt, and pressure on the lira.
Persistent Inflation and Policy Responses
| Date | Inflation Rate |
|---|---|
| Late 2022 | 85.5% |
| Early 2025 | 42.1% |
| Late 2025 (IMF) | 33.5% |
High inflation reduces purchasing power and makes planning hard for families and companies. The Central Bank is raising rates and cutting spending, but results depend on factors like food and energy prices. To keep inflation down, tight policy will need to continue until clear progress is made.
External Debt and Currency Pressures
- External debt expected at $500 billion (2024)
- Government debt-to-GDP: 29.5% (2024)
- Foreign reserves (2025): $144.3 billion, 22nd in the world
- Lira stability is an ongoing concern; interventions cost reserves
If the lira keeps rising in real terms, this could slow exports. The risk is that more appreciation or global shocks could make things worse, so steady and careful policy is needed.
Opportunities and Recommendations for Sustainable Growth
Despite the difficulties, Turkey has many chances to support long-lasting growth. Its young population, strong manufacturing, and location give it natural advantages. Key ways forward include increasing productivity and adopting more technology, as well as protecting the environment.
Innovation and Technological Advancements
- Over 80 technoparks and 6,000+ companies involved in research and development.
- Leading agencies: TÜBİTAK and the Turkish Academy of Sciences.
- Advanced work in the defense industry shows Turkey’s capabilities.
Only about one-third of firms introduced a new product or method between 2018-2020, below the OECD average. Suggestions include encouraging scientists to work in private companies, expanding courses to match job needs, and boosting digital tools in the public and private sectors.
Strategies for Economic Resilience
- Stick with tight monetary policy until inflation clearly falls.
- Widen the tax base and make public spending more efficient.
- Bring more women into the workforce with better childcare and family support.
- Cut back on fossil fuel subsidies and introduce carbon pricing for a cleaner, healthier economy.
- Make rules easier for business and encourage healthy competition to attract investment.
Key Takeaways for Turkey’s Economy in 2025
- Turkey is making steady progress towards more stable and reliable growth in 2025, with good GDP figures despite challenges.
- The ongoing effort to lower inflation is at the heart of economic policymaking. The government’s readiness to make tough decisions is a strong sign.
- For lasting progress, structural reforms will be necessary-especially those that boost innovation and close skill gaps.
- Involving more women in the workforce and moving to renewable energy will help meet future goals, create jobs, and improve health.
- Even as world trade and prices change, Turkey’s focus on sound management, competitiveness, and reducing inequality will help keep it strong.
With solid planning and ongoing action, Turkey is working towards a more stable and better future for its people in 2025 and beyond.
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