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Turkish economic and financials developments 

Signals for demand continue to strengthen
23 Fabruary 2026

Data for January and February indicate that demand conditions in manufacturing industry continue to improve, both driven by domestic and external demand, while production is responding more moderately to this improvement.

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Primary balance have improved; interest payments hit a record high
16 February 2026

The central government budget recorded a deficit of TRY214.5 billion in January, slightly below the Treasury cash balance deficit (TRY246.2 billion).

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The current account deficit accelerated in the last quarter, ending the year at $25.2 billion, exceeding expectations
13 February 2026

The current account deficit was $7.3 billion in December, exceeding both our estimate ($5.6 billion) and the market estimate ($5.4 billion).

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Slight upward revision in forecast range, no clear signal about pausing rate cut cycle
12 February 2026

CBRT kept its interim targets, which it had committed to achieve by separating them from the inflation forecasts in the previous reporting period, unchanged at 16% and 9% for the end of 2026 and 2027, respectively and set at 8% for 2028.

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Industrial production growth accelerated in 2025, while sectoral divergence became more pronounced
10 February 2026

In December, the Industrial Production Index (IPI), recorded a monthly increase of 1.2% in seasonally and calendar adjusted (s.a.) terms, in line with our expectations based on leading indicators.

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With inflation exceeding expectations, higher weight of services in the new basket presents a new challenge for the pace of disinflation.
03 February 2026

Monthly inflation came in at 4.84%, exceeding both our forecast (4.4%) and market forecasts (4.3%). As a result, annual inflation fell slightly by 0.24 percentage points to 30.65%. The decrease in core inflation indicators was more pronounced. B annual inflation fell from 31.7% to 30.1%, and C annual inflation fell from 31.1% to 29.8%.

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No improvement in trade deficit trend yet
02 February 2026

According to provisional data released by the Ministry of Trade, the foreign trade balance posted a deficit of $8.4 billion in January, an increase of $0.8 billion yoy.

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The rate cut was below expectations with 100 bps
22 January 2026

CBRT cut its policy interest rate by 100 basis points (bps), less than expected, setting it at 37.0%. Overnight lending and borrowing rates were also reduced by the same amount, to 40.0% and 35.5% respectively, maintaining the width of the asymmetric interest rate corridor.

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"Slowdown narrative" not confirmed by the data
01 December 2025

In 2025Q3, GDP grew by 3.7% yoy, below market expectations (4.2%) and close to our model estimates (3.8%). Thus, the Turkish economy grew 3.7% yoy over the first three quarters of the year. Seasonally and calendar adjusted (s.a.) GDP grew 1.1% qoq in the third quarter.

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Expectations remained largely unchanged from last month
15 August 2025

The year-end exchange rate expectation rose by 0.24 TL compared to the previous survey period, reaching 44.0. Based on today's value (»40.9), an increase of approximately 7.5% in the exchange rate is expected by the end of the year.

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Demand conditions limit production, while exchange rate increases production costs
30 May 2025

The slowdown in production due to domestic and external demand conditions extended to the 14th month. The decline in May was at the highest rate since October.

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Economic growth regained momentum in the last quarter
28 February 2025

In 2024Q4, GDP grew by 3.0% yoy, in line with our forecast and the average market expectation, and by 1.7% qoq in seasonally and calendar-adjusted terms.

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CBRT revised inflation forecasts upwards but will not respond to the inflationary outlook with a tighter monetary stance
08 November 2024

In the 2024-IV Inflation Report, the CBRT raised its year-end inflation forecasts for 2024, 2025 and 2026 to 44%, 21% and 12%, respectively (Chart 1).
In the previous Inflation Report, the forecasts were 38%, 14% and 9%, respectively. The uncertainty band around the inflation forecasts has been revised to 42%-46% for 2024 and 16%-26% for 2025, while it has been set at 6%-18% for 2026.

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Annual headline inflation increased to 83.45% yoy, with the core C hitting 68.09%
03 October 2022

CPI inflation was below the market expectations in September with 3.08% monthly increase. As a consequence, annual inflation rose from 80.21% to 83.45%, setting another yoy record in the revised series (2003=100).

The continuing upward trend in inflation was mainly driven by the contribution of housing, food, household equipment, restaurants-hotels and transportation. Core-B  index also hiked by 2.74% MoM, bringing its annual rate to 74.63%, up from August’s 72.53%.

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CBRT decision: Emphasis on risks on global growth and inflation
23 June 2022

Risks on global growth and already high global inflation continue. The divergence of monetary policy steps and communications of developed countries' central banks are increasing due to their diverse economic Outlook.

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