Moody's projects steady growth for Turkish economy, declining inflation

Moody's Investors Service has projected a path of stable economic growth coupled with a steady decline in inflation for Türkiye over the coming years. According to the agency's latest Global Structured Finance Outlook report, the Turkish economy is expected to expand by 3.2% in 2025, followed by growth of 3.4% in 2026 and 3.5% in 2027.

A Promising Disinflation Trajectory

The more significant aspect of the Moody's outlook concerns inflation. The report forecasts that Türkiye's inflation rate, a persistent economic challenge, will close 2025 at approximately 35% (with a +/-2% margin). A notable disinflation trend is then projected, with the rate declining to 22% in 2026 and further to 18.5% in 2027. This forecast aligns with the stated goals of Türkiye's economic policymakers, who have prioritized bringing down inflation through monetary tightening and fiscal discipline.

Türkiye's Growth in a Global Context

Moody's report provides a comparative snapshot of major economies. Türkiye's projected growth rate for 2025 (3.2%) exceeds the forecasts for advanced economies like the United States (2.0%) and the Eurozone (1.1%). However, it remains below the rapid expansion anticipated in large emerging markets such as India (7.0%) and China (5.0%) for the same period. This positioning reflects Türkiye's status as an upper-middle-income economy navigating a transition toward greater price stability.

Implications for Economic Policy and Investment

The Moody's assessment suggests cautious optimism regarding the effectiveness of Türkiye's current economic program. If the projected decline in inflation materializes, it could bolster consumer purchasing power, reduce borrowing costs, and improve the overall investment climate. The steady, moderate growth forecast indicates an expectation of economic normalization rather than a boom, which may be viewed favorably for long-term sustainability.