BBVA Research Holds Steady on Turkey’s 2025 Growth Outlook

BBVA Research has reaffirmed its outlook for the Turkish economy in 2025, maintaining its growth expectation at 3.7%, a projection that remains aligned with its earlier forecasts. The reaffirmation comes on the heels of newly released GDP data, offering fresh context for how Turkey’s economic momentum may unfold through the medium term.

BBVA Research Keeps 2025 Forecast Unchanged

In its latest assessment, the institution emphasized that it continues to anticipate 3.7% GDP expansion in 2025, noting that current trends and macro indicators are consistent with this estimate. The decision not to revise the forecast underscores BBVA Research’s view that Turkey’s growth dynamics—while encountering occasional volatility—are broadly on track with earlier expectations.

The report also highlights that the 2026 growth forecast remains unchanged at 4%. Despite shifting global conditions, including fluctuating external demand and tighter global financial conditions, BBVA expects Turkey to maintain a moderate but steady growth trajectory.

Fourth Quarter Signals Solid Momentum

An important piece of evidence supporting BBVA’s outlook is Turkey’s monthly GDP indicator, which the report notes is pointing toward 4.4% year-on-year growth in the fourth quarter.
This indicator, often used to capture early signals in economic activity before full quarterly data are published, suggests that underlying momentum carried into late 2024—providing a stronger base effect for the year ahead.

Such sustained activity implies that consumption, services output, and certain production segments remain resilient despite policy normalization steps, including tighter monetary conditions.

Third Quarter Performance Surprises to the Upside

BBVA Research draws particular attention to the third quarter GDP results, which surpassed what many high-frequency indicators had suggested. While certain daily or weekly data—such as mobility, card spending, and energy usage—had hinted at a potential slowdown, the final GDP print revealed a stronger underlying performance.

The report emphasizes that domestic demand, excluding inventory changes, contributed 6 percentage points to annual growth in the third quarter.
This signals that household consumption, investment activity, and government spending collectively carried the expansion, even as net exports and stock adjustments played less significant roles.

Why the Forecasts Remain Steady

Keeping the 2025 and 2026 projections unchanged reflects BBVA Research’s belief that Turkey’s economic normalization process is advancing without derailing growth prospects. Several factors underpin their confidence:
• Gradual rebalancing of domestic demand amid tighter financial conditions
• Sustained economic activity in the final quarter of the year
• A more predictable policy landscape, especially in monetary and fiscal frameworks
• Resilient private consumption, even if moderating compared to earlier quarters
• Stable investment trends, partially supported by improving sentiment and external financing channels

While inflation remains elevated and global uncertainties persist, BBVA Research points out that Turkey’s economic structure continues to adapt to policy tightening. This resilience, combined with strong Q3 performance and solid Q4 signals, provides the basis for maintaining their medium-term forecasts.

Domestic Demand Still the Core Engine

A central theme of BBVA’s report is that domestic demand—stripped of stock effects—continues to be the dominant driver of Turkey’s growth cycle.
The 6-point contribution in Q3 highlights how much of Turkey’s economic narrative revolves around consumption and investment dynamics.

Even though policymakers have been aiming to cool overheating segments of the economy and rein in inflation, the strength in core demand suggests the adjustment process is unfolding more gradually than rapid tightening cycles in past years.