The Turkish economy is about to enter a pivotal week marked by the release of two significant reports: the gross domestic product (GDP) for the second quarter and inflation data for August. Investors, economists, and policymakers are paying close attention, as these figures could indicate the economic trajectory of heading into 2026.
Key Projections: GDP and Inflation Data
The week begins with anticipation for the release of the Q2 GDP data on Monday. According to a recent Reuters poll, Türkiye’s economy is expected to show a growth of 4.1% in the second quarter, continuing a trend of economic recovery. The projections for the entirety of 2025 suggest a growth rate of 2.9%, which is in line with estimates from other economists reflecting a potential growth range of 2.2% to 5% for Q2.
Following an expansion of 2% in the first quarter, the Turkish economy has been grappling with the effects of tighter monetary policies. The overall growth for 2024 is expected to be 3.2%, with current forecasts indicating a deceleration compared to the strong growth rates seen in recent years.
The Turkish government, under its new medium-term program (MTP) expected to be announced in early September, has outlined aspirations for economic growth—4% in 2025, 4.5% in 2026, and 5% for 2027. However, the recent trend of tightening monetary policy since mid-2023 coupled with global trade challenges has put additional pressure on growth.
Inflation Trends
As attention shifts to the inflation data due on September 3, economists forecast that Türkiye’s monthly inflation rate will come in at 1.79%, with the annual inflation rate anticipated to drop to 32.6%. This is a notable decrease from a staggering 75% in May, showcasing a gradual cooling of inflationary pressures.
The forecasts provided by economists range from 1.54% to 2.2% monthly, and the annual consumer price index (CPI) is expected to hover between 32.2% and 33.2%. This indicates a sustained trend towards disinflation, as evidenced by a decrease in core goods inflation, which fell below 2% in July.
HSBC has pointed out that if the August CPI continuing to show disinflationary trends, this could result in more aggressive interest rate cuts by the central bank. Currently, the central bank’s policy rate stands at 43%, having recently initiated a series of rate cuts after months of holding steady.
Market Sentiment
The recent efforts of the Turkish central bank to manage inflation through rate adjustments have not gone unnoticed. As reports of an anticipated easing in inflation circulate, markets might respond positively, particularly if upcoming reports align with predictions.
In addition to the GDP and inflation reports, the Turkish Trade Ministry, alongside the Turkish Exporters Assembly, is expected to provide preliminary foreign trade data for August, which will further contribute to understanding the health of the Turkish economy.
The overall sentiment in the markets is cautiously optimistic, especially given the historical context of Turkey’s economic challenges. The significant cut in rates, combined with softer inflation rates, could create a more favorable environment for investments.
Conclusion
In summary, the upcoming week will be crucial for the Turkish economy with the release of both GDP and inflation data. The anticipated GDP growth of 4.1% for Q2 and cooling inflation would ideally signal a recovery phase, although lingering uncertainties, such as monetary policy and global trade impacts, continue to cloud the outlook.
Moving forward, the government’s new medium-term program will be pivotal as it sets the tone for policy direction over the next three years. All stakeholders, including investors and policymakers, will monitor these developments closely as Türkiye navigates the complex interplay of domestic and external economic forces.
As the economic landscape evolves, strategic decisions made in the coming weeks will significantly influence Türkiye’s economic resilience as it heads into 2026 and beyond.
