Published: 2025-12-01T10:41:03.000Z

Turkish Economy Expanded by 3.7% in Q3 Backed by Robust HH Consumption and Investments

14

Bottom Line: Turkish Statistical Institute (TUIK) announced GDP growth for Q3 on December 1. Turkish economy grew by 3.7% YoY in Q3 backed by household consumption, investments, and government spending.

Figure 1: GDP (%, YoY), Q1 2022 – Q3 2025

Source: Continuum Economics

Despite stubborn inflation and high interest rates continue to weigh on real consumer demand along with subdued external demand due to the tariff-related drag on global activity, Turkiye's GDP growth hit 3.7% YoY in Q3 backed by robust household consumption, investments, and government spending. GDP edged up by 1.1% in the three months to September on q/q, down from 1.6% in the previous quarter.

According to announcement, final consumption expenditure by resident households surged by 4.8% y/y, and government final consumption expenditure increased by 0.8%. Fixed investments surged to their highest in two years with increasing 11.7% y/y.

On sectoral level, annual growth of industrial production edged up from 6% to 6.5% while manufacturing output expanded by 7.7% y/y, after a 6.9% in Q2. The construction sector also maintained robust momentum, and accelerated from 11.1% growth in Q2 to 13.9% in Q3.

Speaking about Q3 growth figure, Finance Minister Mehmet Simsek said "We anticipate that growth will remain moderate in the final quarter and exceed the Medium-Term Program slightly in 2025." Simsek added that "More favorable financial conditions and a supportive global environment are expected to drive stronger economic activity in 2026 compared with this year.” (Note: Turkish government’s growth forecast for 2025 is 3.3% in the Medium-Term Program).

Supported by positive impacts of the rate cuts and increasing business confidence assuming no dramatic impact from weaker external demand, we think GDP growth will remain its strong pace heading towards 2026. There is still a downside risk that growth will remain under pressure in Q4 2025 and in H1 2026 due to high interest rates, contractionary fiscal actions and additional macro prudential policies to fight against the elevated inflation coupled with adverse global outlook. Additionally, the continuation of Russia-Ukraine war is another important risk factor.

4Cast Ltd. and all of its affiliates (Continuum Economics) do not conduct “investment research” as defined in the FCA Conduct of Business Sourcebook (COBS) section 12 nor do they provide “advice about securities” as defined in the Regulation of Investment Advisors by the U.S. SEC. Continuum Economics is not regulated by the SEC or by the FCA or by any other regulatory body. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Continuum Economics has an internal policy that prohibits “front-running” and that is designed to minimize the risk of receiving or misusing confidential or potentially material non-public information. The views and conclusions expressed here may be changed without notice. Continuum Economics, its partners and employees make no representation about the completeness or accuracy of the data, calculations, information or opinions contained in this report. This report may not be copied, redistributed or reproduced in part or whole without Continuum Economics’s express permission. Information contained in this report or relied upon in its construction may previously have been disclosed under a consulting agreement with one or more clients. The prices of securities referred to in the report may rise or fall and past performance and forecasts should not be treated as a reliable indicator of future performance or results. This report is not directed to you if Continuum Economics is barred from doing so in your jurisdiction. Nor is it an offer or solicitation to buy or sell securities or to enter into any investment transaction or use any investment service.
Analyst Declaration
I,Volkan Sezgin, the Senior EMEA Economist declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.