Economy of Turkey expands by 2 percentage points during the initial quarter
Quarterly Economic Review: Turkey's Moderate Growth in Q1 2025
Turkey's economy expanded at a modest pace in the opening quarter of 2025, as revealed by data from the Turkish Statistical Institute (TÜİK). The GDP grew by 2% year-on-year, slightly below earlier projections of approximately 2.3%. On a seasonally and calendar-adjusted basis, the economy grew by 1% compared to the previous quarter.
In the first quarter, gross domestic product (GDP) soared to 12.12 trillion Turkish Liras ($335.5 billion) at current prices, representing a 36.7% increase compared to the same period last year. The growth appears to have been driven by robust domestic demand, as final consumption of households increased by 2%.
However, some sectors have experienced a contraction. The industry sector shrank by 1.8%, with the manufacturing output falling by 2.4% and the agriculture sector decreasing by 2%. The construction sector also saw a slowdown in growth, with an annual expansion of 7.3%, down from the previous quarter's 8.7%.
Imports rose by 5% due to higher energy costs, which could impact the trade balance and overall economic performance. In contrast, exports grew by a mere 2%, a significant slowdown compared to previous periods.
Finance Minister Mehmet Şimşek highlighted the government's efforts to maintain a balance between consumption and investment, suggesting ongoing measures to support growth and employment. Inflation remains a concern, but the minister noted that disinflation efforts are on track.
For the full year 2025, economists expect a GDP growth of around 3%, which is slightly lower than the government's initial expectations. The economic activities are expected to continue at a moderate pace, with the government implementing measures to cushion potential adverse effects from the disinflation process.
In conclusion, Turkey's economy is navigating a challenging environment with slower growth and ongoing inflationary pressures. Despite these challenges, the economy remains on a path of moderate expansion.
The Finance Minister, Mehmet Şimşek, has emphasized the government's efforts to balance consumption and investment, signifying ongoing measures to support growth and employment in the finance sector.
The economy's overall performance is expected to be affected by rising imports and slowing exports, which could potentially impact the trade balance and finance, as highlighted by the Finance Minister.
