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- EBRD downgrades Türkiye forecast to 2.8 per cent growth in 2025
- Downside risks remain amid high inflation and tight global financial conditions
- Bank notes improved external position but low FDI
The European Bank for Reconstruction and Development (EBRD) expects Türkiye’s economy to grow by 2.8 per cent in 2025, downgraded from its February 2025 forecast due to lower domestic and external demand and tighter-than-expected monetary policy.
The Bank expects the Turkish economy to then grow by 3.5 per cent in 2026, unchanged from previous forecasts.
The forecasts were published today in the Bank’s Regional Economic Prospects report, which revised the EBRD’s aggregate 2025 growth forecast for its regions of operations down by 0.2 percentage points to 3 per cent. The revision is a result of increased global policy uncertainty, weaker external demand and the direct and indirect effects of announced increases in import tariffs.
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. 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.
The report notes recent improvements in the economy’s external position, with net exports rising and the current account deficit declining steadily in the 12 months to February 2025. However, inflows of foreign direct investment (FDI) remained relatively low at US$ 12.2 billion (€10.8 billion).
The EBRD invested a record €2.6 billion in Türkiye in 2024, driven by the private sector’s appetite for green investments and the Bank’s continuing support for regions affected by the February 2023 earthquakes.
The Bank’s cumulative investment in the country stands at over €22 billion, with its current portfolio in the country totalling around €8 billion.