OECD Lowers Türkiye’s 2025–2026 Growth Forecasts, Warns of Inflation Risks

The Organisation for Economic Co-operation and Development (OECD) has downgraded its economic growth projections for Türkiye in its June 2025 Economic Outlook report, citing tight monetary conditions and weakening global trade.

Previously, the OECD had forecast Türkiye’s economy to grow by 3.1% in 2025 and 3.9% in 2026. However, the new projections revise those figures downward to 2.9% and 3.3%, respectively.

Tight Monetary Policy and Fiscal Austerity Impacting Domestic Demand

In its assessment, the OECD stated:

“Tightened financial conditions and fiscal consolidation are reducing household consumption. Private investment and export growth will slow in 2025 due to weakening global trade, but are expected to gradually recover in 2026.”

The report emphasized that tight monetary policy is likely to reduce inflation significantly, estimating that it will decline to around 15% by the end of 2026.

However, the OECD cautioned that upside risks to inflation remain, and uncertainties persist in global trade dynamics. It stressed:

“Fiscal and monetary policies must remain restrictive to keep inflation on a firmly downward trajectory.”

Revised Inflation and Unemployment Forecasts

While the OECD maintained its 2025 inflation forecast at 31.4%, it raised the 2026 forecast from 17.3% to 18.5%. Core inflation is projected at 32.3% in 2025 and 18.6% in 2026.

In terms of the labor market, the OECD expects Türkiye’s unemployment rate to stand at 8.6% in 2025 and slightly improve to 8.5% in 2026.

Call for Structural Reforms to Support Long-Term Growth

The OECD report highlighted that lower inflation in 2026 could pave the way for a less restrictive monetary stance, potentially supporting growth. It further urged structural reforms in areas such as the labor market and competition policy, which could enhance macroeconomic stability and boost long-term growth potential.