Türkiye’s economy expanded 2.3% year-on-year in the second quarter, data showed on Monday, below forecasts as domestic demand shrank amid tight monetary policy and the Iran war impact.
In a Reuters poll, economic growth was estimated to have risen by 2.9% in the second quarter and was forecast to expand by 3.05% in 2026. It was the fourth consecutive quarter of slower growth.
Treasury and Finance Minister Mehmet Simsek said that growth would rise after the "balanced" second-quarter growth.
"Thanks to progress in the disinflation process and more supportive global conditions, we expect growth to gradually increase in the coming period," Simsek said in a statement after the data.
Second-quarter gross domestic product grew 1.1% from the previous quarter on a seasonally and calendar-adjusted basis, the Turkish Statistical Institute data showed.
The strongest growth by activity was shown by agriculture, forestry and fishing, which expanded 13.3%, while information and communication grew 8.6%, the data showed.
Haluk Burumcekci from Burumcekci Research and Consultancy said there was an "increasingly evident loss of momentum in domestic demand", adding that the "positive contribution from net external demand after six quarters suggests that the first signs of the 'rebalancing among demand components,' one of the key objectives of the economic program, have begun to emerge".
External demand contributed 0.6 percentage points to second quarter growth, while domestic demand shrank 1.3% quarter-on-quarter, economists said, noting that this was a disinflationary development.
Turkish annual consumer price inflation stood at 31.75% in July, underscoring the challenges for the central bank, which has held rates at 37% in the last four policy meetings as it monitors Iran war fallout.
While tight monetary and fiscal policies implemented to balance domestic demand and combat high inflation put pressure on economic growth, the economy grew by 2.6% in the first quarter, according to revised figures.
Growth in 2025 was revised to 3.7% from 3.6%.
The government's current medium-term program projected growth of 3.8% in 2026. A new medium-term program will be announced on September 7.
