10.04.2025 15:15
The Organisation for Economic Co-operation and Development (OECD) has published its report titled "Turkey Review Report." The report states that the Turkish economy is expected to grow by 3.1% this year and by 3.9% in 2026. It highlights that the Turkish economy has been one of the fastest-growing economies among OECD countries over the past 10 years.
The Organisation for Economic Co-operation and Development (OECD) advised that "cautious macroeconomic policies should continue until inflation is aligned with targets" so that Turkey can fully benefit from the improving perception in international markets. The report titled "Turkey Review Report," prepared as part of OECD's country-specific economic reviews, has been published. Accordingly, the Turkish economy has become one of the fastest-growing economies among OECD countries over the past 10 years, with an average annual growth rate of 4.9%.
During this period, the living standards of the public improved nearly fourfold, and significant improvements were made in the labor market and social indicators. In Turkey, the labor force participation rate among the population aged 15-64 increased from around 50% in 2005 to 60% in 2023, and the poverty rate was halved. Turkey made progress in relatively decoupling its high economic growth during this period from air emissions, energy use, waste generation, and water consumption.
"NORMALIZATION BEGAN AFTER THE ELECTIONS"
According to the OECD, normalization in economic policies began after the elections in May 2023, and the government took necessary steps to stabilize the macroeconomic framework and put the Turkish economy on a sustainable path. The newly adopted tightening approach in monetary and fiscal policies contributed to the stabilization of financial markets, increased confidence, and reduced uncertainty. The OECD recommended that "cautious macroeconomic policies should continue until inflation is aligned with targets" to fully benefit from the improving perception in international markets.
TURKISH ECONOMY WILL GROW BY 3.1% THIS YEAR
In this context, maintaining a cautious macroeconomic policy stance that contributes to the re-establishment of sustainable growth is critical for fully controlling inflation. However, tighter financial conditions are expected to limit household consumption due to restrictive monetary and fiscal policies, and economic activity is anticipated to weaken over the next two years. In light of these expectations, the OECD predicts that the Turkish economy will grow by 3.1% this year and by 3.9% in 2026, with inflation expected to reach 31.4% by the end of this year and 17.3% in 2026. While Turkey's public debt-to-GDP ratio remains relatively low, the budget deficit is expected to decrease to 2.6% by 2026. It is anticipated that investments and public expenditures will decline, while a gradual increase in exports will occur with the improvement of the external environment.
"ECONOMIC GROWTH"
Additionally, strengthening fiscal discipline, increasing spending efficiency, broadening tax revenues, and implementing structural reforms to promote inclusive growth are needed in Turkey. According to the OECD, Turkey's successful continuation of economic convergence depends on the implementation of structural reforms.
In this context, maintaining a reliable and stable macroeconomic policy environment to support investment and growth is of great importance, while removing barriers that restrict labor mobility and entrepreneurship is expected to allow Turkey to fully benefit from its strong potential. On the other hand, the OECD recommended taking steps regarding ongoing significant structural issues, including the aging population in Turkey and the low participation of women in the labor force.
EMPHASIS ON GREEN TRANSITION
According to the report, steps such as removing barriers to employment to increase women's participation in the labor force and expanding affordable early childhood education and care services are needed, while increasing labor productivity and skills, especially in the service sectors, is essential. Furthermore, to achieve Turkey's net zero emissions target by 2053, emissions need to be priced more effectively, and a shift away from coal in energy production is required. Accelerating the green transition is expected to make economic growth sustainable and provide significant health benefits.
"INCREASING PRODUCTIVITY IS TURKEY'S PRIORITY"
OECD Secretary-General Mathias Cormann stated at the presentation of the report held in Istanbul that the changes in Turkey's macroeconomic policies have improved its external financing position and investor perception, and that monetary and fiscal policy must remain restrictive to support a sustainable decline in inflation. Cormann noted that productivity growth in Turkey has occurred at a significant pace in recent years, saying, "There are opportunities to do better. Increasing productivity further remains a policy priority for Turkey."
Cormann pointed out that Turkey has been one of the fastest-growing countries in the OECD in recent years, stating, "It will be important to build on this exceptional progress and optimize policies that will best support ongoing convergence with other OECD countries and within the OECD. We look forward to continuing our partnership with Turkey as a valuable founding member of the OECD, particularly in areas highlighted as priorities in our survey, including improving public finance, supporting innovation, increasing opportunities for women, and accelerating climate transition."