Levent Gürses
On the first day of the week, growth figures were released; at 2.5 per cent in the first quarter, the growth rate fell slightly short of expectations. Meanwhile, another significant piece of news was the report that investment bank Jefferies International was set to open a $20 billion swap line for Turkey, similar to the arrangement with Argentina. Such a development, viewed as part of election preparations, suggests that the US may wish to bolster Turkey’s weak foreign exchange reserves and reinforce confidence in financial markets ahead of the upcoming elections.
Whilst putting the finishing touches to the weekly bulletin on Friday morning, the May inflation figures were released; according to TÜİK data, the inflation rate for May was recorded at 1.71 per cent. Annual inflation was announced at 32.6 per cent. The highest annual increase, at 50 per cent, occurred in the education sector. Housing prices, meanwhile, rose by 45 per cent over the year. The annual increases for the three main expenditure groups with the highest weightings are as follows: 34.8 per cent for food and non-alcoholic beverages, 34.3 per cent for transport, and 45.6 per cent for housing, water, electricity, gas and other fuels.
Let us begin with the growth figures; the Turkish Statistical Institute (TÜİK) has announced the growth figures for the first quarter of 2026. According to these, the Turkish economy grew by 2.5 per cent, falling short of expectations. The forecast had been 2.7 per cent. Growth in the first quarter of last year was at the same level.
The fact that the first-quarter rates remained the same resulted in the annualised growth rate remaining unchanged. Turkey had grown by 3.6 per cent in the whole of 2025; as of the first quarter of this year, the annualised rate also stood at 3.6 per cent.
A worrying contraction in industry
The most striking aspect, based on the sectors comprising GDP, is the contraction in the industrial sector. A contraction of 0.8 per cent was observed in industry compared to the previous year.
In the first quarter, the agricultural sector grew by 4.6 per cent. Growth rates in other sectors were as follows: information and communication activities 9.5%, other service activities 5.2%, trade, transport, accommodation and food services 3.7%, financial and insurance activities 3.5%, the construction sector 3.2%, real estate activities 3.0%, professional, administrative and support service activities 1.9%, and public administration, education, human health and social service activities 1.8%.
“The slowdown in industry is not surprising”
Prof. Dr. Hayri Kozanoğlu, a columnist for Birgün newspaper, analysed the situation across sectors in the first quarter, stating, “This is by no means a surprising situation. Because when monitored on a monthly basis, it is clear that manufacturing output has fallen, with a more pronounced slowdown observed in the production of motor vehicles and durable consumer goods. Car and white goods sales and export figures are also far from encouraging. We see that the construction sector has lost momentum compared to previous periods, growing by 3.2 per cent, whilst the main driver of growth is information and communication activities, which are striving to adapt to technological developments.
‘Agriculture also recorded a 4.6 per cent growth compared to the previous year, due to more favourable weather conditions,’ he wrote.
On the other hand, final consumption expenditure by resident households increased by 4.8 per cent in the first quarter of 2026 compared to the same quarter of the previous year, as measured by the chained volume index. Government final consumption expenditure rose by 2.1 per cent, whilst gross fixed capital formation increased by 3.0 per cent. The share of labour compensation in Gross Value Added at current prices stood at 42.7 per cent in the first quarter of last year, and remained at 42.7 per cent in the first quarter of 2026. The share of net operating surplus in mixed income stood at 36.3% in the first quarter of last year, but fell to 35.8% in the first quarter of 2026.
An increase not reflected in public perception, supported by a strong Turkish Lira
The first-quarter GDP figure, at current prices and in US dollar terms, stood at 389 billion 598 million, whilst on an annualised basis for the first quarters, it reached a total of 1 trillion 639 billion 357 million dollars.
Prof. Dr Hayri Kozanoğlu noted that this growth does not reflect an increase in the country’s prosperity, writing: “There has been a 43 billion dollar increase in GDP in US dollar terms. This is not a reflection of increased prosperity in the country, but merely a statistical result of the deliberate keeping of the Turkish lira’s depreciation against foreign currencies at a low level.”
Consumption-driven growth
Prof. Dr. Kozanoğlu drew attention to consumption-driven growth, stating, “3.7 percentage points of the growth came from consumption. Whilst a 12.7 per cent decline in goods and services exports reduced growth by 2.9 percentage points, a 2.0 per cent contraction in imports contributed a positive 0.5 percentage points. ‘Considering that global trade showed a 5.3 per cent increase in the quarter in question, it can be safely said that the problem we are facing stems not from the global economic climate but from Turkey’s own structural issues,’ he said.
Şeref Oğuz, a columnist for Ekonomim Gazetesi, questioned the quality of growth, commenting: “It is certainly poor. For we are growing not by producing and selling what we produce, but by consuming. In a sense, the economy’s core is not a baby, but a gas-filled balloon. We could call this not growth, but inflation.”
Mahfi Eğilmez: Not great, but…
Economist Mahfi Eğilmez, assessing the 2.5 per cent growth in the first quarter of the year, emphasised that the contraction in the industrial sector poses a serious risk to the economy as a whole.
Noting that a recovery is visible in the agricultural sector but the contraction in industry continues, Eğilmez said, “The agricultural sector grew by 4.6 per cent. There is a recovery, though it is not recovering as much as it contracted last year, but there is a trend towards recovery. The industrial sector contracted by 0.8 per cent. This is a serious problem. The industrial sector is not contracting on its own. It is a major driver of the services and trade sectors, and they are also being affected.
Information and communication also grew by 9.5 per cent, as expected. A 2.5 per cent figure is not a great result, but it is not a disastrous one either. Growing at half our potential growth rate points to a serious output gap. I think we will see a similar trend in the coming quarter. It might be slightly higher, but I do not think we will reach the 5 per cent mark.”
“Consumption-driven growth is fuelling inflation”Noting that growth in Turkey is largely consumption-driven, Eğilmez said that high inflation creates a vicious circle by boosting demand. Eğilmez said, “Turkey’s main growth comes from consumption. When there is inflation, consumption also rises. Instead of buying one item, people buy two. There is this kind of artificial demand. This demand, in turn, fuels inflation. It’s developing within a self-perpetuating vicious cycle,” he said.OECD issues growth warning; revises forecast to 3.1%The Organisation for Economic Co-operation and Development (OECD) has revised downwards its 2026 growth forecast for the Turkish economy in its Economic Outlook report. It has lowered Turkey’s 2026 growth forecast, previously announced at 3.3 per cent in March, to 3.1 per cent.The report stated regarding the Turkish economy: “Following the slowdown at the start of the first half of 2026, a recovery in domestic demand is expected as the negative effects of the conflicts in the Middle East ease, with annual growth reaching 3.1% in 2026.” It left its growth forecast for 2027 unchanged at 3.8%.The OECD emphasised that rapidly reducing inflation must be a key policy priority in Turkey, whilst noting that the Central Bank could raise interest rates if deemed necessary.Global growth forecast also revised downwardsThe OECD also revised its global growth forecast downwards, lowering this year’s global growth forecast from 2.9% to 2.8%. The global growth forecast for 2027, however, was raised from 3% to 3.1%.The report also highlighted the impact on the Turkish economy of rising energy and fertiliser prices due to the war in Iran.The OECD noted that these developments are exerting upward pressure on the current account deficit and inflation in Turkey, which is dependent on imports for energy and fertilisers.EBRD revises growth forecast downwardsThe European Bank for Reconstruction and Development (EBRD) has revised its growth forecasts for the Turkish economy downwards. According to the EBRD’s report, the Turkish economy is expected to grow by 3.5 per cent in 2026. The institution had previously forecast 4 per cent growth for this year.Deutsche Bank report: 1999 meets 1990Deutsche Bank analysts have published the World Economic Outlook Report. The report, which highlights that 2026 will be “anything but boring”, emphasises the key expectation: “A US-Iran agreement in June, the resumption of shipments through the Strait of Hormuz, and Brent crude oil falling to $86 per barrel in the fourth quarter.”Global growth warning from Fitch: Risks have increasedIn its latest Global Economic Outlook report for June, Fitch Ratings stated that the oil crisis triggered by the US-Iran conflict has negatively impacted global growth expectations. The organisation noted that this situation led Fitch to lower its 2026 global growth forecast by 0.2 percentage points to 2.4 per cent.
‘US may offer dollar swap line to Turkey ahead of elections’Durukal Gün, a strategist at investment bank Jefferies International, wrote in a report that the US administration could offer a dollar swap line to Turkey ahead of the elections. The report highlighted the Trump administration’s 20 billion dollar swap agreement with the Central Bank of ArgentinaAn analysis reported by Bloomberg suggested that Washington might wish to bolster Turkey’s weak foreign exchange reserves and reinforce confidence in financial markets ahead of the upcoming elections in Turkey.The report stated that, whilst there have been no officially announced swap negotiations between Turkish and US economic officials to date, providing such foreign exchange swap support—as in the case of Argentina—is a highly rational and plausible scenario.“It will deter the trend towards dollarisation in the local market”Strategist Durukal Gün stated that such a move from the US would directly alleviate the pressure on the Turkish lira’s depreciation, bring inflation expectations under control, and deter the trend towards dollarisation in the local market.It was argued that Turkey’s five-year credit default swap (CDS) spread, which has been on an upward trend due to the pricing of rising financial risks in recent months, could also be brought down thanks to this agreement. Whilst a decline of 1.39 per cent was recorded in futures instruments amid volatility in Turkish assets in global markets, it was reported that a potential swap line could make this improvement permanent.‘It would be purely political support, but we have no need for it’Commenting on the matter on social media, Prof. Dr Hakan Kara, former Chief Economist at the Central Bank of the Republic of Turkey (TCMB), stated: “If such an option were provided, it would be purely political support. As the Fed is unlikely to view this favourably, a solution involving direct intervention by the US Treasury could be devised (the Argentina model). As it would not require approval from Congress or the Senate, such a decision could be taken directly by the Trump administration.My personal view is that Turkey will not need such a swap line unless it embarks on an adventurous policy. Nevertheless, if a concrete step is taken under current conditions to confirm the existence of this possibility, it would open up a certain degree of manoeuvre for economic management,” he said.‘A new example of the Trump Era in the world’Oksijen columnist and economist Haluk Bürümcekçi had highlighted in his column published on 17 October 2025 that the Argentine example could be a noteworthy development for Turkey as well. In his article, Bürümcekçi wrote: ‘A new example of the Trump Era in the world: the US provided Argentina, which is in crisis, with both a $20 billion swap facility and purchased pesos from the markets. This is a noteworthy development for countries like Turkey seeking stability without IMF support.’The US had supported the Milei governmentLast year, the US Treasury Department entered into a $20 billion swap agreement with the Central Bank of Argentina and supported the government of Javier Milei by directly purchasing pesos from the market. It was suggested that this method—implemented just before the by-elections in Argentina under the Trump administration’s decision to stabilise the markets and prevent sudden devaluations of the national currency—could also serve as a similar protective shield for the Turkish economy.A swap line is known as a mechanism that enables central banks to provide liquidity by exchanging their own currencies with one another for a specific period. A potential dollar swap line could enable Turkey to access direct dollar liquidity when needed.Prof. Dr Hakan Kara: Wheat purchase price reduced the likelihood of early electionsProf. Dr. Hakan Kara, former Chief Economist at the Central Bank of the Republic of Turkey (TCMB), argued that the annual 22.2 per cent increase in the purchase price of bread wheat remained limited in an inflationary environment, and that this situation has significantly reduced the likelihood of an early election this year.Prof. Dr. Kara, a lecturer at Bilkent University, commented on his social media account, stating, “The 22.2 per cent increase in the purchase price of bread wheat for 2026 compared to last year indicates that the likelihood of an early election this year is quite low.”Whilst it is known that higher increases in agricultural subsidies and purchase prices can be implemented during election periods, Kara’s assessment indicated that the current increase has remained relatively limited.The poverty line has risen to 35,174 lira, with the minimum wage at just 80 per cent of thisRises in the poverty and hunger lines continue. According to a Turkish-İş survey, the poverty line—which indicates the monthly food expenditure for a family of four—rose to 35,174 TL in May. The April figure was 34,587 TL. The poverty line, which represents the total income a household needs to cover all basic expenses including food, has risen to 114,576 TL.The minimum wage, which remains below even the January poverty line announced by Türk-İş, was 10 per cent below the poverty line of 31,224 TL at the start of the year. This ratio has gradually decreased as the year has progressed. As of May, the minimum wage covers only 79.8 per cent of the poverty line, which stood at 35,174 TL. In other words, the net minimum wage covers approximately four-fifths of the poverty line in May. Wheat and barley production declines, whilst imports have doubledAlarm bells are ringing regarding wheat and barley production, which accounts for 40 per cent of Turkey’s cultivated land. As agricultural policies under the AKP government became increasingly reliant on imports, farmers were cut off from production, whilst Turkey paid billions of dollars to foreign producers.Speaking to the Cumhuriyet newspaper, agricultural writer Gazi Kutlu stated: “Whilst production has declined, imports have doubled. During the AKP’s time in power, 112 million tonnes of wheat and 11 million tonnes of barley were imported. 31 billion dollars were paid for wheat imports and 3 billion dollars for barley imports. Whilst Turkey’s dependence on foreign sources for its staple foodstuffs has grown year on year, the bulk of imports came from Russia. Last year, 95 per cent of the 4.8 million tonnes of wheat imported came from Russia. Of the 656,000 tonnes of barley, 45 per cent was imported from Russia and 15 per cent from Ukraine.
Even in the first four months of this year, half of last year’s total wheat imports were reached. Of the 2.3 million tonnes of wheat imported, 91 per cent came from Russia. Of the 575,000 tonnes of barley, 49 per cent came from Russia and 29 per cent from Germany,” he said.
The difference between the narrow and broad definitions of the unemployment rate stood at 21.9 percentage pointsIn April, the official unemployment rate stood at 8.2 per cent, whilst the broad-based actual unemployment rate was 30.1 per cent. Broad-based female unemployment reached 40.1 per cent, whilst the difference in percentage points between the narrow and broad definitions of the unemployment rate was recorded as 21.9.According to TÜİK data, whilst the official unemployment rate rose slightly to 8.2 per cent in April, the broad-based unemployment rate (underutilised labour force), which also includes time-related underemployment and the potential labour force, fell by 1.2 percentage points to 30.1 per cent. The seasonally adjusted number of employed persons fell by 356,000 to 32,166,000. The employment rate, meanwhile, fell by 0.6 percentage points to 48.1 per cent. The labour force also decreased by 361,000 during the same period, standing at 35,034,000. The labour force participation rate fell by 0.6 percentage points to 52.4 per cent.The cost of the War and the Butlan ruling: A $51 billion meltdown in reserves over three monthsThe Iran War, which broke out on 28 February, and the subsequent CHP’s Absolute Nullity ruling led to a decline in Central Bank reserves. During the three-month period following the war, a decline was observed in both foreign exchange and gold reserves, with the total loss reaching $51 billion as of 29 May.On 27 February, total gross reserves stood at 210 billion 260 million dollars. Due to the shockwaves caused by the war and the impact of the ‘Absolute Nullity’ decision, reserves had fallen to 159 billion 225 million dollars by 29 May.Looking at the initial data following the ‘Absolute Nullity’ decision, a sharp decline in reserves is evident. The ‘Absolute Nullity’ decision was announced on 21 May; whilst reserves fell by 7.43 billion dollars in the week of 22 May, the total decline over the last two weeks amounted to 8.37 billion dollars. The trend in gross reserves over the last three weeks is as follows:Turkey’s total foreign exchange deficit is at a historic high
The market volatility caused by US and Israeli attacks on Iran has also affected Turkey’s foreign exchange position. According to calculations by economist Haluk Bürümcekçi, as a result of capital outflows triggered by geopolitical tensions, Turkey’s total foreign exchange deficit rose by 71.6 billion dollars in March, reaching a historic high of 191.8 billion dollars. According to a report by Cumhuriyet, the Central Bank’s net foreign exchange position falling by $69.8 billion in March to a surplus of $4 billion played a key role in the widening of the deficit. The decline was driven by a net foreign exchange sale of $49.7 billion made to offset foreign outflows.
Foreign investors sold off both shares and bonds
According to Central Bank data, foreign investors sold 91.1 million dollars’ worth of shares and 134.5 million dollars’ worth of bonds in the week ending 26 May. In the week ending 22 May, foreign investors sold 293.1 million dollars’ worth of shares and 334.8 million dollars’ worth of bonds.
Preliminary May data shows exports fell by 9.3 per cent
Trade Minister Ömer Bolat announced the May foreign trade figures. In May, exports fell by 9.3 per cent compared to the same month last year, reaching $22.504 billion. It was stated that, due to the decline in imports, the trade deficit fell by 15.7 per cent to $5.6 billion, reaching its lowest level in the last nine months.
Exorbitant price gap from farm to shop: Price disparity for apples reached 388 per cent
TZOB President Şemsi Bayraktar announced that the highest price difference between producers and retailers in May was observed in apples, at 388 per cent. This was followed by carrots at 278.6 per cent, courgettes at 215.3 per cent and hazelnuts at 206.5 per cent. Due to the depletion of stock in warehouses, dried onions saw the sharpest price rise in both producer and retail markets in May; these were followed by potatoes at 32.7 per cent, lemons at 27.3 per cent and carrots at 20.1 per cent. It was emphasised that the annual rise in the costs of basic agricultural inputs such as fertiliser, feed, electricity and pesticides has also increased the pressure on food prices.
New TOKİ project excludes minimum-wage earners
The new housing initiative announced by Murat Kurum, Minister of Environment, Urbanisation and Climate Change, has completely sidelined minimum-wage earners and low-income citizens with its parameters directly targeting the ‘middle-income’ segment. In the project, where the initial instalment was set at 18,000 TL, millions of workers living on a minimum wage of 28,075 TL were completely excluded from the social housing pool due to the down payment and payment balance required at the very first stage.
Service inflation rose by 34.62 per cent year-on-year in April
According to the Turkish Statistical Institute’s (TÜİK) April Service Producer Price Index (H-PPI) data, producer inflation in the services sector rose by 34.62 per cent year-on-year and 3.23 per cent month-on-month. The index showed an increase of 18.17 per cent compared to December of the previous year and 35.43 per cent compared to the twelve-month average.
Defence industry move from Koç Holding: Acquisition process completed
Otokar, a subsidiary of Koç Holding, has completed the acquisition of a majority stake (96.77 per cent) in the Romanian defence industry company Automecanica S.A., making it a subsidiary. The company announced that a total of 10 million euros had previously been paid to the sellers during the memorandum of understanding and contract signing processes. It was reported that an additional 46.744 million euros was paid to the sellers based on Automecanica’s net debt and net working capital figures in its financial statements as at 31 December 2025. It was stated that the remaining 25 million euros would be held as a cash deposit, to be paid in instalments over three years following the closing, or released if the sellers provided a letter of guarantee.
Efor Holding has acquired Bankpozitif
The Competition Authority has granted approval for the transfer of Bankpozitif, under the administration of the Savings Deposit Insurance Fund (TMSF), to Efor Holding. The Authority officially authorised the transaction whereby Efor Holding A.Ş. assumes sole control of Bankpozitif Credit and Development Bank, the 79% stake in which, owned by PayFix, was transferred to the TMSF in March 2025 as part of an illegal betting investigation.
Turkish Airlines secures Spanish approval for Air Europa investment
Turkish Airlines announced that it has received Spain’s Foreign Direct Investment (FDI) approval for the transaction to acquire a minority stake in Air Europa. The investment, worth approximately 300 million euros, is expected to be completed by 2026.
Housing and rent expenditure rose, transport expenditure fell
TÜİK has shared the results of its “Household Consumption Expenditure, 2025” survey. Across Turkey, housing and rent expenditure accounted for the highest share—29.3 per cent—of household expenditure on consumption. The largest increase in expenditure categories was 3.3 percentage points in housing and rent, whilst the largest decrease was 1.1 percentage points in transport.
Property sales at their lowest level in five years
Approximately 1.03 million properties were sold in Turkey during the first five months of the year. Property sales fell by 13.9 per cent year-on-year during this period, with the highest monthly sales figure of 234,468 recorded in April. Consequently, the five-month data revealed the lowest sales figure in the last five years.
Doruk Mining workers win: All outstanding payments settled
The weeks-long struggle of Doruk Mining workers has ended in victory; their claims for compensation, leave pay and collective agreement differences have been paid in full. Independent Mining Workers’ Union (Bağımsız Maden-İş) stated, “We resisted together, we won together.” The miners concluded their protest in Ankara on Friday 5 June and travelled to join the Özşen miners continuing their resistance in Edirne.
Doruk Mining workers had organised a protest outside Yıldızlar SSS Holding after the government and company representatives failed to honour their promises. The protest received support from political parties and democratic mass organisations. Özgür Özel, the elected General Secretary of the CHP who participated in the protest, stated: “We stand behind the miners until the last penny is paid and they receive their rights.”
Regarding the miners’ outstanding wages, three ministries had acted as guarantors on 28 April, promising that “everyone’s wages would be paid by 15 May”.
Hamdi Ulukaya ranks first in Turkey and 251st worldwide…
The US-based Forbes magazine has updated its list of billionaires worldwide and in Turkey. Despite dropping down the global rankings, Hamdi Ulukaya remained in 251st place, whilst the top spot in Turkey remained unchanged. Hamdi Ulukaya, who produces the US’s most popular yoghurt under the Chobani brand, ranked 251st globally with a fortune of $12.4 billion, despite his decline in the world rankings. In Turkey, however, the top spot remained unchanged. Murat Ülker, with a fortune of $5.2 billion, took first place in Turkey and 805th place globally. Şaban Cemil Kazancı, in 859th place, has a fortune of $5 billion. Erman Ilıcak, chairman of Renaissance Holding, is in 1,146th place with $3.8 billion.
TikTok’s founder became Asia’s second-richest person
According to data from the Bloomberg Billionaires Index, Gautam Adani retained the title of Asia’s richest person with a fortune of $117.4 billion. The rise in the valuation of TikTok’s parent company, ByteDance, and its growth in the artificial intelligence sector have propelled co-founder Zhang Yiming to the position of Asia’s second-richest person with a fortune of $92.8 billion. Zhang has thus overtaken Indian billionaire Mukesh Ambani. Ambani dropped to third place as his fortune fell to $86.9 billion.
IMF forecasts US will return to inflation target ‘with a delay’
IMF Spokesperson Julie Kozack stated that, due to high oil prices and geopolitical risks, inflation in the US would reach the 2% target with a delay by the end of 2027. Emphasising that the Fed should remain cautious, Kozack predicted that oil stocks would fall to their lowest level in five years by July. Explaining that the IMF used the market’s oil futures curve in its forecasts, Kozack noted that they did not make their own projections regarding oil prices.
SpaceX’s largest-ever IPO move
SpaceX, led by US billionaire Elon Musk, plans to go public at $135 per share. The deal, expected to be the largest IPO of all time, aims to raise approximately $75 billion. Calculations based on the IPO documents indicate that SpaceX’s market value could reach approximately $1.77 trillion.
War triggers surge: Aluminium prices hit four-year high
Aluminium prices have risen to a four-year high of $3,734 per tonne following the Iran conflict’s threat to shipments through the Strait of Hormuz and damage to a facility in the UAE. With the metal having gained over 18 per cent in value since the start of the war, rising energy costs and China’s production cap are also increasing pressure on supply.
The proportion of part-time workers in Germany has exceeded 40 per cent for the first time
The number of people in employment in Germany fell by 160,000 in the first quarter of 2026, dropping to 45.64 million. According to an IAB report, while losses in full-time employment were offset by longer working hours among part-time workers, the proportion of part-time workers exceeded the critical threshold for the first time, reaching 40.1 per cent.
Warning from the IEA to the IMF and the World Trade Organisation
In a statement, the International Energy Agency (IEA) noted: “If shipping traffic does not return to normal, the continued rapid depletion of global oil stocks ahead of the peak summer demand in the northern hemisphere will pose increasing risks to fuel security, market conditions and broader economic resilience.”
Trump’s son-in-law and daughter stir up Albania
In Albania, a $1.6 billion tourism project planned by the investment firm of US President Donald Trump’s son-in-law, Jared Kushner, has sparked widespread controversy across the country. Whilst thousands took to the streets in the capital, Tirana, to protest the project, the government stood by the investment.
Goldman Sachs CEO issues warning: ‘Greed can quickly turn to fear’
Goldman Sachs CEO David Solomon noted that there is strong market appetite for potential initial public offerings (IPOs) by artificial intelligence companies, stating that there is high liquidity in the system. Solomon said, “We are definitely in a period where greed outweighs fear. Greed can turn into fear very quickly.”