Economic Predictions for Turkey
The German-based Deutsche Bank has released a comprehensive report regarding the Turkish economy, making significant predictions about the dollar/TL exchange rate, inflation, interest rates, and growth.
Dollar Exchange Rate Forecast
Deutsche Bank forecasts that the dollar/TL will rise to 43 TL by the end of 2025, with a medium-term projection of 52 TL in 2026 and 62 TL in 2027. This prediction is based on the current prominence of carry trade, but the bank notes that the risk-return balance is expected to weaken as the year progresses.
Inflation Trends
Inflation, which declined rapidly in the first half of 2025 due to base effects, slowed down again in the second half of the year. The bank notes that the ongoing increase in food prices, the stickiness of service inflation, and the weakening of base effects will keep year-end inflation significantly above the Central Bank of the Republic of Turkey’s (CBRT) target of 24%. The bank has updated its inflation forecast for 2026 to 23.8%.
Monetary Policy Expectations
Deutsche Bank expects approximately 100 basis points of interest rate cuts at each Monetary Policy Committee (MPC) meeting in the upcoming period. This forecast suggests that the policy interest rate will decline to 30.5% by the end of 2025. If a stronger improvement in disinflation occurs, 150 basis points cuts could also be on the agenda. The bank predicts that by the end of 2027, the policy interest rate will be around 25%.
Growth Forecast
The report emphasizes that economic activity maintained its resilience in the first nine months of 2025, with growth during this period at 3.7%. Deutsche Bank has raised its growth forecast for 2025 from 3.5% to 3.8%. For 2026, a growth expectation of 4.2% has been shared, with sectors such as defense, services, and construction positively differentiating, while the outlook in low value-added sectors like textiles is weakening.
Conclusion
In conclusion, Deutsche Bank’s report provides significant insights into the Turkish economy, predicting a rise in the dollar/TL exchange rate, a slowdown in inflation, and a decline in interest rates. The bank’s growth forecast suggests a resilient economy, with certain sectors driving growth. These predictions provide valuable information for investors and policymakers, highlighting the need for careful monitoring of the economy and adjustments to monetary policy as needed.
