Turkey’s economy grew 3.7 percent year on year in the third quarter of 2025, coming in below expectations and giving the central bank more room to continue lowering interest rates as policymakers assess the inflation outlook, Bloomberg reported.
The 3.7 percent third-quarter growth fell short of the 4.2 percent expansion economists in a Bloomberg survey had expected. On a quarterly basis, however, growth outperformed forecasts.
The economy expanded 1.1 percent from the previous three months, according to data released Monday by the Turkish Statistical Institute (TurkStat), exceeding projections for roughly half that pace.
The economy’s softer annual pace comes as Turkey’s central bank continues an easing cycle that resumed in July after a brief pause.
The bank’s policymakers have proceeded more cautiously in recent months due to higher price pressures, though some analysts expect the pace of rate cuts to pick up again depending on November inflation figures scheduled for release on Wednesday.
Inflation eased to 32.9 percent in October and is projected to finish the year between 31 and 33 percent, still well above the central bank’s target range.
Central Bank Governor Fatih Karahan said last week he expects incoming data to show an improvement from earlier months. The benchmark rate currently stands at 39.5 percent after the monetary policy committee last cut borrowing costs in October.
The International Monetary Fund said after a staff visit last month that lower interest rates and a less restrictive fiscal stance could bolster demand in 2026, though it cautioned that an economy running near full capacity could slow progress on taming inflation. Recent price readings, the IMF noted, suggest current measures may not be tight enough to ensure a continued slowdown.
According to the government’s three-year economic program, GDP is expected to grow 3.3 percent in 2025 and 3.8 percent the following year, with officials projecting a further acceleration to 4.3 percent in 2027