ING Updates Türkiye Outlook: Growth Accelerates as Inflation and Rates Ease

ING Global has revised its macroeconomic outlook for Türkiye, presenting an updated set of projections that span growth, inflation, interest rates, bond yields, and foreign exchange rates through 2026 and into 2027. The new assessment reflects the institution’s evolving view on Türkiye’s disinflation path, monetary normalization, and medium-term growth dynamics

Stronger Growth Signals in the Medium Term

According to ING Global’s updated projections, Türkiye’s economic momentum is expected to strengthen gradually over the forecast horizon. The institution estimates that economic growth will reach 4.2% in the final quarter of 2026, followed by a further acceleration to 4.6% by the second quarter of 2027. These figures suggest a recovery profile supported by improving financial conditions, easing inflationary pressures, and a normalization in domestic demand.

The growth outlook suggests Türkiye could enter a more balanced expansion phase after years marked by volatility and policy shifts. ING’s projections indicate that, as macroeconomic stability improves, investment activity and consumption may regain traction, contributing to higher output growth. This expected acceleration also points to resilience in the Turkish economy despite lingering global uncertainties and tighter financial conditions worldwide.

Inflation Forecast Points to Continued Disinflation

A central pillar of ING Global’s outlook is the anticipated decline in inflation. The institution now forecasts that year-end consumer inflation (CPI) will fall to 22.0% by the end of 2026, before easing further to 19.4% by the second quarter of 2027. These estimates highlight a continued disinflation trend, signaling that price pressures are expected to moderate over time.

The downward revision in inflation expectations reflects assumptions of tighter monetary discipline, reduced pass-through from exchange rates, and a gradual anchoring of inflation expectations. While inflation is projected to remain elevated compared with many emerging markets, the forecast suggests a meaningful improvement relative to recent years of high and volatile price growth.

Interest Rates Expected to Decline Gradually

In line with the disinflation outlook, ING Global anticipates a gradual easing in interest rates. The benchmark policy rate is projected at 27.0% by the end of 2026, declining further to 23.0% by the second quarter of 2027. This path suggests that monetary authorities may have room to cautiously reduce rates as inflation decelerates, while still maintaining a restrictive stance to preserve price stability.

Such a trajectory points to a delicate balancing act between supporting economic growth and preventing a resurgence of inflationary pressures. ING’s projections imply that interest rate cuts, if implemented, are likely to be measured rather than aggressive, reflecting a commitment to macroeconomic prudence.

Bond Yields Reflect Improving Financial Conditions

The updated outlook also includes revised expectations for long-term borrowing costs. ING Global forecasts that the 10-year government bond yield will stand at 23.57% by the end of 2026, before declining to 20.36% by the second quarter of 2027. This downward trend in yields signals improving investor confidence and expectations of lower inflation over the medium term.

Falling long-term yields could ease financing conditions for both the public and private sectors, potentially supporting investment and infrastructure spending. However, yields are still projected to remain relatively high, underscoring the importance of sustained policy credibility and fiscal discipline.

Exchange Rate Projections Highlight Ongoing Depreciation

On the foreign exchange front, ING Global expects continued depreciation of the Turkish lira, albeit in a more orderly fashion. The USD/TRY exchange rate is projected at 51.0 by the end of 2026, rising further to 55.06 by the second quarter of 2027. Similarly, the EUR/TRY rate is forecast to reach 62.22 by end-2026 and 67.17 by mid-2027.

These projections reflect persistent external imbalances, inflation differentials, and the gradual adjustment of the currency over time. While depreciation remains part of the outlook, the pace implied by ING suggests a more controlled environment compared with previous episodes of sharp currency swings.

A Cautiously Optimistic Outlook for Türkiye

Overall, ING Global’s updated forecasts paint a picture of cautious optimism for the Turkish economy. Stronger growth, easing inflation, and gradually declining interest rates point toward a period of relative stabilization. At the same time, the projections underscore that challenges remain, particularly in managing inflation expectations, maintaining currency stability, and sustaining investor confidence.

As Türkiye moves through 2026 and into 2027, ING’s outlook suggests that consistent and credible economic policies will be critical in translating these forecasts into reality. The balance between growth and stability will likely define the country’s macroeconomic performance in the coming years.