OECD expects Türkiye’s growth to rebound by 2026

ANKARA

Türkiye’s steadfast economic policies could further enhance international investor confidence and pave the way for sustainable growth by 2026, according to Sebastien Turban, an OECD economist and co-author of the organization’s recent “Türkiye Review Report.”

In an interview with state-run Anadolu Agency, Turban outlined the report’s findings, highlighting Türkiye’s macroeconomic transformation and its promising economic trajectory.

Since mid-2023, Türkiye has implemented tighter monetary and fiscal policies, resulting in a reduced current account deficit and gradually declining inflation and inflation expectations, Turban noted.

“Although inflation remains high, it continues to trend downward,” he said, emphasizing that the current policy stance aligns with the projections of the Organization for Economic Co-operation and Development [OECD].

“Maintaining this tight monetary and fiscal approach until inflation is under control is crucial. If the government achieves its Medium-Term Program targets and sustains low budget deficits, public debt will remain sustainable.”

Turban praised the Central Bank of Türkiye and fiscal authorities for their strong commitment to these policies.

“The Central Bank’s communications clearly state that monetary policy will remain tight until inflation is managed, with interest rate decisions guided by inflation trends and expectations,” he said.

While acknowledging the risk of premature policy easing, Turban stressed that the OECD’s baseline scenario expects continued adherence to robust macroeconomic commitments.

The policy shift has also bolstered Türkiye’s external position, with gross reserves rising significantly over the past two years. Net reserves, excluding swaps, turned positive in 2024 for the first time since early 2020, Turban highlighted. Despite recent declines, he described the overall reserve increase as “a highly positive development,” reflecting improved economic stability.

Before these policies, Türkiye’s economic growth was “unsustainably high,” Turban explained, but tighter measures have moderated it to more sustainable levels. The OECD projects Türkiye’s economy to grow by 3.1 percent this year, with growth expected to rebound to 3.9 percent by 2026, aligning with the country’s potential growth rate of 4 percent.

“This level of growth avoids excessive inflationary pressure,” Turban said, noting that the current slowdown is a deliberate outcome of policies aimed at curbing inflation.

Turban also addressed Türkiye’s improving image among international investors, citing recent credit rating upgrades as evidence of growing optimism.

“There’s still room to build on this progress,” he said, stressing the importance of attracting stable, long-term foreign direct investments rather than volatile capital flows.