Turkiye’s Economy Logs 3.6% Growth in 2025

The Turkish economy expanded 3.4 percent year-over-year in the fourth quarter of 2025, driven by domestic demand, bringing full-year growth to 3.6 percent, official data showed on Monday.

The figures came in slightly below market expectations of 3.5 percent growth in the final quarter and 3.7 percent for the full year. Growth had slowed to 3.3 percent in 2024 from 5 percent the previous year.

Treasury and Finance Minister Mehmet Şimşek said increased demand from trading partners and improvements in financial conditions are expected to contribute to growth in 2026, assuming that risks stemming from geopolitical developments are temporary and uncertainties in global trade ease.

His remarks came as markets reacted sharply to escalating tensions in the Middle East following attacks by Israel and the United States on Iran.

Data from the Turkish Statistical Institute (TurkStat) showed that last year’s expansion was led by the construction sector, where value-added rose 10.8 percent, followed by information and communication activities at 8 percent.

The agriculture, forestry and fishing sector contracted by 8.8 percent.

Şimşek said production continued to increase across most sectors despite adverse weather conditions weighing on agriculture.

“While the effects of frost and drought in agriculture continued in the final quarter of the year, production increases were sustained in other sectors,” he said.

Industrial value-added rose 2.9% in 2025, marking the highest increase in four years, he added.

Value-added in construction also maintained strong momentum, partly driven by accelerated housing deliveries in earthquake-affected regions.

Şimşek said net foreign demand made a negative contribution to growth in 2025, amid rising protectionism and global trade uncertainty.

 However, the current account deficit remained at sustainable levels at 1.6 percent of gross domestic product (GDP).

“To make our gains permanent, we will support our policies with structural and supply-side steps. We will continue to implement our program with determination to ensure price stability, which will provide sustainable high growth and a fairer income distribution,” he added.

A year‑over‑year breakdown of expenditure components showed that private consumption rose by 5.2 percent and contributed 3.7 percentage points to GDP.

“This reflects an acceleration from the previous quarter, likely supported by the central bank’s ongoing rate‑cutting cycle, the wealth effect from higher gold prices and persistently elevated inflation expectations,” said analysts at Dutch financial giant ING.

Investment increased 5.4 percent , adding 1.4 percentage points to growth. The expansion was largely driven by construction investment, which grew 8.7 percent, while machinery and equipment investment rose 2.8 percent.

Public consumption fell 0.9%, subtracting 0.1 percentage points from overall GDP, suggesting tighter fiscal discipline.

Inventories shaved 0.2 percentage points off growth, while net exports reduced growth by 1.4 points.