2026 Turkey Economy: Balance Expectations and Challenges

General Outlook of the Turkish Economy in 2026

The Turkish economy is entering 2026 with expectations of achieving equilibrium after high inflation and cost pressures in 2025. Minister of Treasury and Finance Mehmet Şimşek reported that annual inflation was at 38% when he took office in June 2023. This rate is expected to reach 75% in 2024 and to decline to 30-31% in 2025.

Growth Performance and Sectoral Analysis

Turkey closed 2023 with a growth of 4.5%. In 2024, it showed a growth of 3.2%, with the first quarter of 2025 growing by 2.5%, the second quarter by 4.6%, and the third quarter by 3.7%. The industrial sector grew by 6.5%, construction and services sectors grew by 4.6%, while the agricultural sector contracted by 12.7%. Machine-equipment investments exhibited a growth of 11.3%. It is expected that in 2026, Turkey will grow at a rate of 4-4.5%, surpassing the 3.8% forecast in the Medium Term Program.

Developments in Inflation and Price Movements

As of November 2025, monthly inflation was realized at 0.87%, and annual inflation at 31.07%. Housing, food, and transportation sectors contributed the most to inflation during this period. While the economic administration forecasts inflation to decrease to 16% by the end of 2026, independent institutions' estimates show an end-of-year inflation around 25%.

Labor Force and Unemployment Rate

As of October 2025, the number of unemployed was 3 million 33 thousand, with an unemployment rate recorded at 8.5%. The unemployment rate was 7% for men and 11.3% for women. The inactive labor force rate remains high at 29.6%. It is anticipated that unemployment will remain at similar levels to 2025 in 2026.

Exchange Rates and Foreign Trade Expectations

At the end of 2025, the dollar exchange rate is around 42.8 TL. It is expected that in 2026, the rate will rise by 20% to reach levels of 50 TL. From January to November 2025, exports were recorded at 247.2 billion dollars, while imports were at 329.7 billion dollars. For 2026, the export target is 282 billion dollars, and the import expectation is 378 billion dollars.

Current Account Deficit and Budget Balance

As of October 2025, the current account deficit was projected to be 20.9 billion dollars, and the budget deficit was 1.3 trillion lira. For 2026, budget expenditures are expected to be 18.98 trillion TL, and revenues to be 16.27 trillion TL, with the deficit amounting to 2.7 trillion TL.

In summary, the most important expectation for the Turkish economy in 2026 will be to establish an environment of balance under high costs and inflationary pressure. Both the business community and citizens hope for stability in both economic parameters and political processes.