The European Bank for Reconstruction and Development (EBRD) expects Türkiye’s economy to grow by 2.8% in 2025, a downgrade from its February 2025 forecast, due to weaker domestic and external demand and a tighter-than-expected monetary policy.

The Bank expects the Turkish economy to grow by 3.5% in 2026, unchanged from its previous forecast.

The projections have been published today in the Bank’s Regional Economic Prospects report, which revised the EBRD’s aggregate 2025 growth forecast for its regions of operation down by 0.2% to 3%. The downgrade reflects heightened global policy uncertainty, weaker external demand, and both the direct and indirect effects of recently announced increases in import tariffs, the report reads.

"Türkiye’s downward revision reflects expectations of tighter domestic financial conditions as heightened uncertainty weighs on domestic demand, as well as weakening external demand due to increased uncertainty around global trade policy. Downside risks stem from still-high inflation and the impact of tighter-for-longer global financial conditions on Türkiye’s substantial short-term external financing needs," - EBRD says in statement.

The report notes recent improvements in the economy’s external position, with net exports rising and the current account deficit declining steadily in the 12 months to February 2025. However, inflows of foreign direct investment (FDI) remained relatively low at $12.2 billion (€10.8 billion).

The EBRD invested a record €2.6 billion in Türkiye in 2024, driven by the private sector’s appetite for green investments and the Bank’s continuing support for regions affected by the February 2023 earthquakes.

Copied