Turkiye’s Economy Grows 2.5% in Q1 Despite Shocks

Turkiye’s economy lost momentum in the first quarter of the year, but still remained in positive territory despite the fallout from the Middle East conflict, official data showed Monday.

Gross domestic product (GDP) expanded 2.5 percent on a yearly basis in the January-March period, compared with 3.4 percent in the previous quarter, according to Turkish Statistical Institute (TurkStat).

The slowdown coincided with the start of the US-Israel war on Iran, which sent energy prices soaring and revived inflationary pressures.

Authorities had already been pursuing tight monetary policy to sustain disinflation trend, which slowed in recent months as the Iran war pushed energy-market volatility.

Despite multiple shocks and global uncertainty, Treasury and Finance Minister Mehmet Şimşek said the economy maintained uninterrupted growth for 23 consecutive quarters, adding that national income had exceeded $1.6 trillion.

“Global uncertainties and the weak outlook among our trading partners, together with net external demand, limited growth,” Şimşek wrote on the social media platform X.

GDP grew 0.1 percent from the previous quarter on a seasonally and calendar-adjusted basis, down from 0.4 percent in the prior three months, the TurkStat data showed.

Surveys had expected a 2.7 percent annual expansion and about 0.3 percent growth quarter-over-quarter.

The data also showed the calendar-adjusted chained volume index of GDP increased by 2.6 percent compared with the same quarter of the previous year.

There was no revision to the 2025 growth rate of 3.6 percent , the data showed. After growing 4.7 percent in the second quarter last year, growth slowed to 3.8 percent and then 3.4 percent in the following two quarters.

At current prices, GDP rose 35.7 percent year-over-year to TL 16.99 trillion ($389.6 billion) in the first quarter of this year.

Among economic sectors, information and communication recorded the strongest annual growth, with value added increasing 9.5 percent.

Other services activities grew 5.2 percent, followed by agriculture, forestry and fishing at 4.6 percent, trade, transportation, accommodation and food services at 3.7 percent, financial and insurance activities at 3.5 percent and construction at 3.2 percent.

Real estate activities expanded 3 percent, while taxes less subsidies on products increased 2 percent. Professional, administrative and support service activities rose 1.9 percent, and public administration, education, human health, and social work activities increased 1.8 percent. The industrial sector, however, contracted 0.8 percent during the period.

On the expenditure side, final consumption expenditure of resident households rose 4.8 percent year-over-year in the first quarter, while government final consumption expenditure increased 2.1 percent.