EBRD Lowers Türkiye’s 2025 Growth Forecast to 2.8%

The European Bank for Reconstruction and Development (EBRD) has revised down its economic growth forecast for Türkiye in 2025 to 2.8%, citing weaker domestic and global demand as well as tighter-than-expected monetary policy. The new figure marks a downgrade from the Bank’s February 2025 projection.

Looking ahead, the EBRD maintains its 2026 growth forecast at 3.5%, signaling a cautiously optimistic outlook once short-term pressures subside.

The projections were released as part of the EBRD’s Regional Economic Prospects report, which also reduced the overall 2025 growth forecast across its operating regions by 0.2 percentage points to 3%. The revision reflects global trade uncertainties, increased tariffs, and muted external demand.

Türkiye Faces Financial Pressures

The EBRD attributed the downward revision for Türkiye to tightening financial conditions, as ongoing economic uncertainty dampens domestic consumption and external demand weakens due to shifting trade policies.

The report highlights persistent risks tied to high inflation and the country’s heavy short-term external financing needs, which remain vulnerable to prolonged global monetary tightening.

Signs of Improvement, Yet FDI Lags

Despite headwinds, Türkiye’s external accounts show signs of recovery. Net exports have risen, and the current account deficit has narrowed steadily in the 12 months leading to February 2025. However, the country’s ability to attract foreign direct investment (FDI) remains modest, with inflows reaching just US$ 12.2 billion (€10.8 billion).

EBRD’s Support Remains Strong

In 2024, the EBRD invested a record €2.6 billion in Türkiye, reflecting robust private sector interest in green investments and continued support for regions affected by the February 2023 earthquakes. The Bank’s total cumulative investment in Türkiye now exceeds €22 billion, with a current portfolio worth approximately €8 billion.

The EBRD’s strategic presence in Türkiye underscores the country’s importance as a regional economic player, even as it navigates inflation risks, global volatility, and structural financing challenges.