The Organization for Economic Cooperation and Development (OECD) has forecasted that the Turkish economy will grow by 3.1 percent this year. The organization also predicted inflation to be at 31.4 percent by 2025.

In order for Turkey to fully benefit from the improved perception in international markets, the OECD recommended continuing cautious macroeconomic policies until inflation aligns with targets. The OECD published a report titled “Turkey Review Report” as part of its country-specific economic assessments. According to the report, the Turkish economy has been one of the fastest-growing economies among OECD countries in the past decade, with an average annual growth rate of 4.9 percent. During this period, the living standards of the population improved approximately fourfold, significant improvements were made in the labor market, and social indicators showed progress. Labor force participation in the population aged 15-64 increased from around 50 percent in 2005 to 60 percent in 2023, while the poverty rate halved.

GROWTH AND INFLATION EXPECTATION
The OECD expects the Turkish economy to grow by 3.1 percent this year and by 3.9 percent in 2026, with inflation reaching 31.4 percent by the end of this year and 17.3 percent in 2026. While Turkey’s public debt as a percentage of Gross Domestic Product remains relatively low, it is projected that the budget deficit will decrease to 2.6 percent by 2026. A decrease in investments and government spending is anticipated, along with a gradual increase in exports due to improvements in the external environment.

CALL FOR STRUCTURAL REFORM
Furthermore, there is a need for strengthening fiscal discipline, increasing expenditure efficiency, expanding tax revenues, and implementing structural reforms to promote inclusive growth in Turkey. According to the OECD, Turkey’s successful economic convergence will depend on the implementation of structural reforms. Accelerating green transformation is expected to make economic growth more sustainable and provide significant health benefits.