European Commission's 2025 forecasts for the Turkish economy

According to the report published by the European Commission, the Turkish economy is set to grow by 2.8 percent in 2025. This rate is expected to rise to 3.5 percent in 2026. However, it is estimated that domestic political uncertainties could lead to fluctuations in financial markets, negatively impacting economic growth.

The report states that household consumption is expected to increase by approximately 3.5 percent, supported by improvements in financial conditions. On the other hand, it is noted that high real interest rates are limiting private investment, and that anti-inflation programs, which constrain public consumption growth, require tighter fiscal policies.

TRADE AND INTEREST RATES

The report stated, "Gross fixed capital formation increased at the end of 2024 but is likely to be lower in the near term as earthquake reconstruction efforts wind down, while relatively high real interest rates are constraining private investment. The authorities have announced a tighter fiscal policy to support anti-inflation programs, which will be a factor limiting public consumption growth."

UNEMPLOYMENT RATES

Despite the slowdown in economic activity in 2024, the labor market remained relatively resilient. In 2025, job growth is expected to weaken and unemployment is expected to rise. High levels of labor shortages will continue to limit cost pressures.