UN Sees Gradual Acceleration in Turkey’s Economy as Inflation Remains in Double Digits

The United Nations has released its latest global outlook report, World Economic Situation and Prospects 2026, offering key projections for the Turkish economy over the coming years. Published today, the report outlines expectations of steadily strengthening economic growth in Turkey while emphasizing that inflation, although on a downward path, is likely to remain in double-digit territory for some time.

According to the UN assessment, Turkey’s macroeconomic outlook reflects a cautious recovery narrative. Growth is expected to gradually pick up, supported primarily by domestic demand and the services sector, while price stability remains a medium-term challenge despite ongoing disinflation efforts.

Economic Growth Expected to Exceed 4% by 2027

The UN report notes that Turkey closed 2025 with economic growth of 3.7%, setting the stage for a moderate acceleration in the following years. Updated projections point to a stronger expansion trajectory through 2026 and 2027, with growth forecast to move above the 4% threshold by the end of the outlook period.

The UN’s growth projections for Turkey are as follows:

2026 growth forecast: 3.9%
2027 growth forecast: 4.1%

This expected improvement is largely attributed to resilient domestic demand and the continued expansion of the services sector. Tourism, trade, and transportation activities are identified as the dominant contributors to services-led growth, while public consumption is projected to play a more limited role than private-sector-driven activity.

Inflation Outlook: Declining Trend, Persistent Double Digits

While growth prospects appear constructive, the UN report highlights ongoing challenges in Turkey’s inflation outlook. Although inflation is expected to continue trending downward, the pace of disinflation is projected to be gradual, delaying a return to single-digit levels.

The UN’s inflation projections for Turkey indicate the following trajectory:

End-2026 inflation forecast: 22.4%
End-2027 inflation forecast: 19.8%

UN economists stress that, despite visible progress in reducing inflationary pressures, price growth is likely to remain elevated relative to long-term targets. The report underscores the continued importance of tight monetary and fiscal policies in sustaining the disinflation process and anchoring expectations.

Investment Activity Strengthens as Consumption Holds Firm

A closer look at the report’s sectoral breakdown reveals improving conditions on the investment front. Capital formation is expected to strengthen, driven primarily by construction activity and higher machinery and equipment spending. These trends suggest a gradual recovery in business confidence and investment appetite, particularly in domestically oriented sectors.

Private consumption is also projected to remain relatively resilient. Household spending continues to be supported by demand for durable goods and services, indicating that domestic demand remains a key pillar of economic activity even amid tighter financial conditions.

Industrial Production Faces Headwinds

Despite the generally positive outlook for growth and consumption, the UN report flags emerging risks within the industrial sector. Manufacturing activity shows signs of losing momentum, particularly in the second half of the year, reflecting weaker external demand and global trade conditions.

One of the key indicators highlighted is the Purchasing Managers’ Index (PMI). In October, Turkey’s manufacturing PMI fell to 46.5, a level that signals contraction. This decline suggests that the recovery in industrial output has slowed and that export-oriented manufacturing remains under pressure from subdued global demand.

Consumer Confidence Signals Domestic Support

In contrast to the softness observed in industrial indicators, consumer sentiment presents a more optimistic picture. According to the report, consumer confidence has reached its highest level since the second quarter of 2023. This improvement suggests that households continue to support economic activity, even as policy tightening measures remain in place.

The UN notes that stronger consumer confidence helps offset weaknesses in external demand, reinforcing the domestic market’s role as a stabilizing force for Turkey’s economy during the adjustment period.

Balanced Outlook With Structural Challenges Ahead

Overall, the UN’s World Economic Situation and Prospects 2026 report presents a balanced view of Turkey’s economic trajectory. While growth is expected to strengthen gradually and exceed 4% by 2027, inflation remains a central challenge that will require sustained policy discipline.

The report emphasizes that Turkey’s medium-term performance will depend on maintaining macroeconomic stability, supporting investment-led growth, and managing the transition toward lower inflation without undermining domestic demand. As global conditions evolve, Turkey’s ability to navigate external risks while sustaining internal momentum will be critical to achieving a more stable and durable growth path.