Türkiye’s economy grows 2.5% in Q1 2026, below expectations

Türkiye’s economy grew by 2.5% in the first quarter of 2026 compared to the same period last year, according to official data released Monday by the Turkish Statistical Institute (TurkStat). The growth rate slowed from 3.4% in the previous quarter and came in below market expectations of 2.7%. At current prices, GDP rose 35.7% year-on-year to 16.99 trillion Turkish liras ($389.6 billion). Household consumption, a key driver, increased 4.8%, while government spending rose 2.1%. Gross fixed capital formation climbed 3%.

Sectoral performance

The information and communication sector recorded the strongest annual growth at 9.5%, followed by other service activities (5.2%), agriculture, forestry and fishing (4.6%), and trade, transportation, accommodation and food services (3.7%). However, the industrial sector contracted by 0.8%. On the expenditure side, exports of goods and services declined sharply by 12.7% year-on-year, reflecting the impact of the Iran war and the closure of the Strait of Hormuz on Turkish trade. Imports fell by 2%.

Context for Türkiye

The Q1 growth figures come amid significant external headwinds, including the US-Israeli war on Iran, which began on Feb. 28, and the subsequent closure of the strait. These disruptions have raised energy costs and reduced export demand from key markets. Despite these challenges, Türkiye’s economy continued to expand, supported by strong domestic consumption and government spending. Turkish officials have expressed confidence that growth will rebound once regional stability is restored.