The Organization for Economic Co-operation and Development (OECD) predicted that the Turkish economy will grow by 3.1% this year. The organization also forecasted inflation to be at 31.4% in 2025.

In order for Turkey to fully benefit from the improved perception in international markets, OECD recommended the continuation of cautious macroeconomic policies until inflation aligns with targets. The OECD’s “Turkey Country Review” report, prepared as part of country-specific economic assessments, has been released. According to the report, the Turkish economy has been one of the fastest-growing among OECD countries over the last decade, averaging a 4.9% annual growth. During this period, the population’s living standards improved by about four times, significant improvements were made in the labor market and social indicators. Labor force participation in the 15-64 age group in Turkey increased from about 50% in 2005 to 60% in 2023, and the poverty rate decreased by half.

GROWTH AND INFLATION EXPECTATION
OECD forecasts that the Turkish economy will grow by 3.1% this year and by 3.9% in 2026, while inflation is expected to be at 31.4% by the end of this year and at 17.3% in 2026. While Turkey’s public debt relative to Gross Domestic Product is expected to remain relatively low, the budget deficit is projected to decline to 2.6% by 2026. A decrease in investments and public spending is expected, alongside a gradual increase in exports due to the improving external environment.

CALL FOR STRUCTURAL REFORMS
Furthermore, Turkey needs structural reforms to strengthen fiscal discipline, enhance spending efficiency, broaden tax revenues, and promote inclusive growth. According to the OECD, Turkey’s successful economic convergence depends on implementing structural reforms. Accelerating green transformation is expected to make economic growth sustainable and provide significant health gains.