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 4.1% in 2023 (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, the reduction in poverty rates has lost momentum since 2016, hindered by increasing inequality highlighting 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 3.3% in 2024 and 3.6% 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 3.6% in 2025 due to the conflict in the Middle East and the associated policy responses. The projections assume a temporary disruption to energy supply, driving up prices in 2026 of Brent oil to $88–100 per barrel, natural gas to $20–27 per million British thermal units, and fertilizer up 20% on average, and are subject to considerable uncertainty. Growth is expected to accelerate to 3.7% in 2027 and 4.3% in 2028 with a pickup in private 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 28.3% by end-2026. The current account deficit may widen with higher oil price and recovering consumption growth in outer years. The fiscal deficit is projected to remain around 3% of GDP.

Despite the 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.

Downside risks stem from the conflict, particularly if energy prices remain elevated beyond 2026. If energy prices stay higher for longer than in the baseline, the negative impact on inflation, growth and the current account could be higher. Furthermore, the slowed pace of disinflation is testing the resilience of consumers and firms—as real disposable incomes of consumers erode and the longer adjustment process puts pressure on firms, risking their ability to sustain employment and investment. Faster-than-expected easing of monetary policy or heightened market uncertainty could trigger a run to foreign exchange by domestic investors, putting upward pressure on inflation and reserve accumulation. Faster progress on structural reforms could boost productivity-led growth, accelerate disinflation, and increase the resilience of the economy.

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. The recently concluded Annual Business Planning Exercise (ABPE) has refined the program, structuring it around five Engagement Areas (EA). 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.

There are 39 active IBRD operations amounting to $19.7 billion. The portfolio also includes one project financed by the Global Environment Facility (GEF) and six trust fund-supported projects, including almost $450 million in European Union trust funds.

Key Advisory Services and Analytics (ASA) Activities: The ASA portfolio is strategically consolidated around core and extended core ASAs including: Programmatic Public Finance Review, Growth and Jobs, the Impact of AI on the job market, and AI in the fight for tax evasion.

Read More

Read Less