Türkiye

Türkiye is the 17th largest economy in the world with a GDP of $1.60 trillion as of 2025. It is a member of the OECD and the G20 and an increasingly important donor of official development assistance (ODA).

Türkiye enjoyed high growth rates between 2006 and 2017 supported by ambitious reforms, propelling the country to upper-middle-income status. Real GDP growth averaged 5.4% between 2002 and 2022, doubling income per capita (in real terms). Moreover, growth was accompanied by rapid poverty reduction: the poverty rate decreased from above 20% in 2007 to 2.5% in 2024 (upper-middle-income poverty rate of $8.30 in 2021 PPP).

For Türkiye to preserve and further its progress, it must navigate through significant challenges. Key among these is regaining macroeconomic stability in a post-COVID era marked by a challenging macroeconomic climate and reversing a downward trend in productivity observed since the mid-2010s. Furthermore, although economic expansion has continued, increasing inequality highlights the need for interventions that contribute to job creation. Türkiye continues to address the effects of the earthquakes that hit the country in 2023. They caused more than 50,000 casualties, injured 107,000 people, damaged or destroyed 1.9 million housing units, and displaced 3.3 million people, of whom two million needed shelters. The assessments estimated the recovery and reconstruction needs at around $81.5 billion. Risks also remain high, with about 70% of the country’s population living in first- and second-degree seismic zones.

Following the May 2023 Presidential elections, an economic team launched a comprehensive policy set to address past macroeconomic imbalances, especially high inflation. Since then, Türkiye has been moving to normalizing its macroeconomic strategies. The country experienced a robust economic expansion of 5.0% in 2023 that moderated slightly to 3.5% in 2024 and 3.7% in 2025. Growth is expected to be negatively impacted by the conflict in the Middle East. Longstanding macro and structural challenges that undermine potential growth—including high inflation, low productivity growth, and weakening foreign direct investment—would require robust fiscal measures and ambitious structural reforms to help accelerate sustainable economic growth.

Read More

Read Less

Türkiye’s growth projections for 2026 have been adjusted down to 2.8% from 3.7% in 2025 due to the conflict in the Middle East and the associated policy responses. Growth is expected to accelerate to 3.8% in 2027 and 4.5% in 2028 with a pickup in private and public consumption and investment. The conflict is impacting growth through higher energy prices, higher risk premia, and higher interest rates on the back of higher inflation. Disinflation is projected to progress gradually due to sticky services inflation and higher energy and food prices in 2026, with inflation expected to decline to 29.3% by end-2026. The current account deficit may widen with higher oil prices and recovering consumption growth in outer years. The fiscal deficit is projected to remain around 3% of GDP.

Despite headline poverty reduction, uneven welfare outcomes call for targeted social policies. Poorer households remain especially vulnerable to price shocks from the conflict in the Middle East: bottom-decile households spend eight times more of their budget on natural gas and oil than top-decile households. Food also represents 32% of their consumption, and rising energy prices are likely to push food costs higher through logistics.

Risks are mainly on the downside. Premature monetary easing or market volatility could re-ignite foreign exchange (FX) demand and exchange-rate pressures, slowing disinflation and reserve accumulation. Higher-than-projected energy prices due to an extended Middle East conflict could further weigh inflation and the current account. Tighter global financing and weaker EU demand could hurt exports and capital inflows, pressuring the current account. On the upside, durable disinflation, continued credible fiscal adjustment, and productivity-enhancing reforms could support a stronger recovery.

Read More

Read Less

The Türkiye Country Partnership Framework (CPF) is the World Bank Group strategy to deliver impactful solutions at greater scale and speed in Türkiye over FY24-FY28. It was discussed by the World Bank Group Board in April 2024 and focuses on selected challenges under three broad areas:

• High and sustainable productivity growth;
• Inclusive services and jobs;
• Strengthen resilience against natural disasters.

The program revolves around five Engagement Areas (EA) that fall under these priority areas: The first EA is Agriculture and Water, which focuses on boosting agricultural competitiveness through climate-smart practices, improved and more efficient irrigation services, and natural resource management. The second is Energy Transition, supporting the greening of industrial firms and the large-scale expansion of renewable energy capacity. The third is Transport and Connective Infrastructure, aimed at improving logistics efficiency, increasing rail freight's modal share, and removing critical network bottlenecks. The fourth is Support for SMEs and Jobs in Manufacturing, targeting technology adoption, export competitiveness, and post-earthquake economic recovery of industrial firms. The fifth and final EA is Resilience, responding to the 2023 earthquakes and enhancing natural disaster preparedness through the reconstruction and/or retrofitting of earthquake-safe housing and public buildings, and hospitals; forest fire risk management; and broader disaster preparedness.

The IBRD portfolio in Türkiye comprises 38 active lending operations totaling $19.9 billion, complemented by three guarantee operations amounting to $1.93 billion. Several operations also benefit from financing provided through the Global Environment Facility (GEF), the Clean Technology Fund (CTF), and other trust funds, including approximately €290 million in European Union for co-financing supporting three operations.

Key Advisory Services and Analytics (ASA) Activities: The ASA portfolio is strategically consolidated around c growth and jobs, technological change and the green transition, public financial management, poverty and inequality, financial and private-sector resilience, and the decarbonization of energy and transport.

Read More

Read Less