Turkey Economic Outlook
Rapid recent growth:
Turkey, a transcontinental nation bridging Asia and Europe, boasts an economy with a GDP worth over USD 900 billion and a population of over 85 million. GDP growth in the decade to 2023 was rapid at around 5% annually, and Turkey was one of the few large economies in the world to continue expanding in 2020 despite the COVID-19 pandemic.
A diversified economy:While services make up the largest share of the economy—with tourism services particularly key—Turkey also has a sizable manufacturing sector worth over 20% of GDP. Automobiles, textiles, refined oil and jewellery are important exports. Agriculture represents around 6% of GDP, with major products including grains, fruits and vegetables.
Trade relations:Turkey entered a customs union with the European Union in 1995, though the union does not cover agricultural products. Further economic integration with the EU has been paralyzed for years due to fears in Western capitals about migration and the rule of law, and is like to remain so in the coming years.
Unorthodox economic policies:In the years before President Erdogan's May 2023 election win, monetary policy was extremely loose due to his preference for low interest rates. This has translated into a collapsing lira and some of the world's highest inflation rates, which weighed on purchasing power and investor sentiment. Monetary policy became more conventional after the election, with interest rates more than quintupling between May 2023 and March 2024. That said, Turkey continues to have some of the world’s highest inflation rates.
Economic challenges:Apart from extremely high inflation and a lack of confidence in the local currency, Turkey also suffers from rule of law concerns. The country has become more authoritarian in recent years, with political power tightly concentrated with the President. Moreover, a large and persistent current account deficit, low international reserves and large foreign currency liabilities mean there is a risk of a balance of payments crisis.
Turkey's economic outlook:The country's rapid population growth, growing consumer market, strategic location between Europe and Asia, large tourism potential and a young and entrepreneurial population will support economic activity in the coming years, though concerns over institutions and the rule of law will cap momentum.
Turkey's Macroeconomic Analysis:
Nominal GDP of USD 1,321 billion in 2024.
Nominal GDP of USD 1,115 billion in 2023.
Nominal GDP of USD 1,321 billion in 2024.
GDP per capita of USD 15,450 compared to the global average of USD 10,589.
GDP per capita of USD 15,398 compared to the global average of USD 10,589.
GDP per capita of USD 13,062 compared to the global average of USD 10,589.
Average real GDP growth of 4.8% over the last decade.
Average real GDP growth of 5.3% over the last decade.
Average real GDP growth of 4.8% over the last decade.
Sector Analysis
In 2022, services accounted for 54.0% of overall GDP, manufacturing 19.4%, other industrial activity 20.4%, and agriculture 6.2%. Looking at GDP by expenditure, private consumption accounted for 59.4% of GDP in 2023, government consumption 13.6%, fixed investment 29.4%, and net exports -2.4%.International trade
In 2023, manufactured products made up 73.3% of total merchandise exports, mineral fuels 6.4%, food 12.0%, ores and metals 4.4% and agricultural raw materials 0.7%, with other categories accounting for 3.2% of the total. In the same period, manufactured products made up 57.6% of total merchandise imports, mineral fuels 8.3%, food 6.5%, ores and metals 6.6% and agricultural raw materials 1.8%, with other goods accounting for 19.2% of the total. Total exports were worth USD 257.50 billion in 2024, while total imports were USD 313.80 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 5.3% in the decade to 2023. That said, Turkey was one of the few large economies to avoid contraction in 2020 during the pandemic, and has generally outperformed most Eastern European economies in recent years, aided by burgeoning tourism, rapid population growth and fiscal handouts. To read more about GDP growth in Turkey, go to our dedicated page.
Fiscal policy
Turkey's fiscal deficit averaged 2.1% of GDP in the decade to 2023. Moreover, the deficit surged in 2023 due to fiscal largesse ahead of the May 2023 elections. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 11.0% in the decade to 2024. The COVID-19 pandemic further impacted job markets. While the rate has fallen post pandemic, unemployment remains a concern, particularly among youth and in the face of persistent inflation and currency depreciation. For more information on Turkey's unemployment click here.
Inflation
Inflation averaged 25.8% in the decade to 2024. In 2022 and 2023, Turkey faced one of the highest inflation rates globally, amid a weak currency and large fiscal handouts. Go to our Turkey inflation page for extra insight.
Monetary Policy
Turkey's monetary policy rate ended 2024 at 47.50%, up from 8.25% a decade earlier. Political influence on the central bank led to unorthodox monetary policies, including substantial rate cuts despite high inflation. In 2023, the central bank reverted to a more conventional stance, hiking rates from 9% to over 40% in a bid to dampen price pressures. See our Turkey monetary policy page for additional details.
Exchange Rate
Turkey's exchange rate depreciated hugely against the U.S. dollar over the last decade, as a result of extremely high price pressures, periods of unorthodox monetary policy, and growing investor concerns over democracy and the rule of law. For more info on the lira, click here.
Economic situation in Turkey
Sequential GDP growth should have slowed in Q1, according to our panel, though high-frequency data points to upside risks to this projection. Services activity was supportive in January–February, while retail sales remained upbeat over the same two-month period. That said, industrial output lost steam in the quarter. Shifting to Q2, momentum is expected to cool further, with the country facing fresh challenges. Economic sentiment dipped in April after late March’s arrest of opposition leader Ekrem Imamoglu caused protests and turmoil in financial markets, driving the Central Bank to hike rates. Against this backdrop, S&P Global Ratings flagged that the recent increase in political uncertainty could hamper investment and consumer sentiment in the longer run, thus hurting GDP growth prospects. That said, it affirmed Turkey’s ‘BB-’ rating.Turkey Economic Forecasts
Projections out to 2034.53 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 40 expert analysts.
Want to get insight on the economic outlook for Turkey in the coming years? FocusEconomics collects projections out to 2034 on 53 economic indicators for Turkey from a panel of 40 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Turkey economy. To download a sample report on the Turkey's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Turkey Economic Indicators
Frequently Asked Question about Turkey's Economy
Is Turkey a powerful economy?
What kind of economy does Turkey have?
What is the biggest contributor to Turkish GDP?
Turkey has a large and relatively strong economy. It is classified as an upper-middle-income country by the World Bank and is a member of the G20 and the OECD. Turkey's economy is diversified, with strengths in manufacturing, agriculture, and tourism. However, it also faces challenges, including high inflation and external imbalances.
Turkey has a mixed economy with a blend of modern industry and commerce alongside traditional agriculture. It's characterized by a strong private sector, significant state involvement in key industries, and an emerging market status.
The service sector is the biggest contributor to Turkish GDP, encompassing areas like tourism, banking, and retail. This sector is followed by industry, including manufacturing and construction, with agriculture also playing a notable role, though smaller in comparison to services and industry.