Moody’s Forecasts Steady Growth for Türkiye as Inflation Gradually Eases

International credit rating agency Moody’s has released its latest Global Structured Finance report, outlining updated growth and inflation projections for G20 economies, including Türkiye. The report signals a period of moderate but steady economic expansion for Türkiye over the next three years, alongside a gradual decline in inflation, suggesting cautious optimism about macroeconomic stabilization.

According to Moody’s projections, Türkiye’s economy is expected to maintain growth momentum despite persistent inflationary pressures and global uncertainties.

Türkiye’s Growth Outlook: Gradual Acceleration Through 2027

Moody’s forecasts that the Turkish economy will grow by 3.2% in 2025, followed by 3.4% growth in 2026 and 3.5% in 2027. These figures position Türkiye among the faster-growing economies within the G20, reflecting continued domestic demand, investment activity, and structural adjustments underway in economic policy.

The report indicates that while growth remains below the levels seen during past expansionary cycles, the projected trajectory points to greater stability than volatility. Analysts interpret this as a sign that tighter monetary conditions and macroprudential measures are beginning to balance growth with price stability.

Moody’s assessment suggests that Türkiye’s economic performance will benefit from improved financial conditions, normalization in credit markets, and ongoing efforts to rebuild confidence among investors and households.

Inflation Still High, But the Trend Is Downward

Alongside growth forecasts, Moody’s also provided detailed inflation projections, offering insight into the expected pace of disinflation over the medium term.

The agency expects year-end inflation in 2025 to reach 35%, with a margin of error of plus or minus 2 percentage points. While this level remains elevated by international standards, Moody’s emphasizes that it represents a meaningful slowdown compared to previous years.

For 2026, inflation is projected to decline further to 22%, followed by 18.5% in 2027. This downward path suggests that the impact of tighter monetary policy, demand moderation, and base effects will gradually materialize, easing pressure on prices across the economy.

Economists note that although the pace of disinflation appears gradual, the consistency of the forecasted decline is significant. It signals that inflation expectations may begin to stabilize, which is critical for long-term economic planning and investment decisions.

What the Projections Signal for Economic Policy

Moody’s projections imply that Türkiye is entering a phase where growth and disinflation coexist, albeit with challenges. Maintaining economic expansion while reducing inflation has historically been difficult, particularly in emerging markets facing currency volatility and external financing needs.

The report suggests that policy discipline will remain a key determinant of whether these forecasts materialize. Continued coordination between monetary policy, fiscal discipline, and structural reforms is expected to play a central role in sustaining growth while anchoring inflation expectations.

Analysts also highlight that declining inflation, even at a gradual pace, could help restore household purchasing power and reduce business uncertainty. However, they caution that risks remain, including global financial conditions, energy prices, and geopolitical developments that could affect capital flows and cost structures.

Türkiye Within the G20 Context

Moody’s Global Structured Finance report places Türkiye’s outlook within the broader G20 economic landscape, where growth is expected to remain uneven. Advanced economies are projected to expand at slower rates, while several emerging markets, including Türkiye, are expected to outperform the group average.

This relative strength, however, comes with higher inflation compared to peers. Moody’s assessment implicitly underscores the trade-off Türkiye faces: greater growth potential but a longer path to price stability.

A Cautiously Optimistic Outlook

Overall, Moody’s forecasts paint a picture of measured progress rather than rapid transformation. Growth rates above 3% indicate resilience, while the projected decline in inflation suggests that macroeconomic adjustments are beginning to take effect.