EBRD forecasts 2.8 pct growth for Turkish economy this year
The European Bank for Reconstruction and Development (EBRD) expects Türkiye’s economy to grow by 2.8 percent in 2025, downgraded from its February 2025 forecast of 3 percent due to lower domestic and external demand and tighter-than-expected monetary policy.
The bank said in its Regional Economic Prospects report on May 13 that it expects the Turkish economy to then grow by 3.5 percent in 2026, unchanged from previous forecasts.
Türkiye’s downward revision reflects expectations of tighter domestic financial conditions as heightened uncertainty weighs on domestic demand, as well as weakening external demand due to increased uncertainty around global trade policy, the bank explained.
Downside risks stem from still-high inflation and the impact of tighter-for-longer global financial conditions on Türkiye’s substantial short-term external financing needs, it added.
The report notes recent improvements in the economy’s external position, with net exports rising and the current account deficit declining steadily.
However, inflows of foreign direct investment (FDI) remained relatively low at $ 12.2 billion, it said.
The EBRD also lowered its regional economic forecast for 2025 by 0.2 percentage points relative to its February 2025 projections.
According to the bank’s report, economies in which the EBRD invests are now projected to grow by an average of 3.0 percent this year, with a modest recovery to 3.4 percent expected in 2026.
This downward revision follows a similar 0.3 percentage point cut in February and reflects a confluence of global headwinds, the bank said.
“These include a sharp rise in trade and economic policy uncertainty, weaker external demand, and the direct and indirect effects of newly announced import tariff increases,” it added.
