Levent Gürses
Credit rating agency Moody’s upgraded Turkey’s credit rating from B1 to Ba3, while revising its outlook from ‘positive’ to ‘stable.’
Fitch Ratings, on the other hand, confirmed Turkey’s long-term foreign currency credit rating at ‘BB-’ with a ‘stable’ outlook. In its statement, Fitch noted that its base scenario assumes that policies will remain relatively tight through 2026, with some easing expected ahead of the 2028 elections, but no return to negative real interest rates is anticipated.
The statement said that inflation, which fell to 35% in June, is expected to decline to 28% by the end of 2025 and 21% by the end of 2026, but noted that this rate is still high. The statement also said that Turkey’s economy is expected to grow by 2.9% in 2025, 3.5% in 2026 and 4.2% in 2027.
Treasury and Finance Minister Mehmet Şimşek commented on Moody’s upgrade of Turkey’s credit rating, saying, ‘Our economy has overcome a period of domestic and external uncertainties and challenges and has entered a positive cycle again. This rating upgrade confirms that we have managed the process successfully and that our economy is resilient.’
With Moody’s rating upgrade, Turkey’s credit rating stands at BB- for Standard & Poor’s (S&P), Ba3 for Moody’s, and BB- for Fitch. However, this remains well below the investment-grade level…
BBB- for S&P and Fitch, and Baa3 and above for Moody’s are considered investment grade. BB+ for S&P and Fitch, and Ba1 and below for Moody’s are considered speculative grade and are often referred to as ‘junk.’
Although they are not at an investment-grade level, countries with credit ratings above Turkey’s (in order of S&P and Moody’s ratings) include: Albania (BB – Ba3), South Africa (BB-, Ba2), Georgia (BB-, Ba2), Vietnam (BB+, Ba2), Brazil (BB, Ba1), Morocco (BB+, Ba1), and Azerbaijan (BB+, Baa3) stand out.
Among countries with investment-grade ratings (BBB- and Baa3 or higher), Panama, Romania, India, Greece, Mexico, and Kazakhstan stand out.
Wage negotiations in the public sector, strike postponed, critical meeting at the Presidential Complex
No agreement has been reached in seven months on a collective agreement covering 600,000 workers in public institutions, including roads, railways, power plants, ministries, universities and hospitals. The government had previously offered a 16% wage increase corresponding to the inflation rate after July. However, this offer was withdrawn during the week, and a wage increase of 11%, corresponding to the expected inflation rate over the next six months, was proposed instead.
The Turkish Labour Confederation (Türk-İş) rejected the offer, and strike notices began to be posted at public workplaces where the contract had expired. The strike by Eti Maden workers was postponed for 60 days on the grounds of ‘national security.’ The government, which has used strike bans as a tool to suppress the labour struggle, has banned 22 strikes since 2003.
The General Mining Workers’ Union (GMİS) announced that it had decided to go on strike on Saturday, 2 August, after failing to reach an agreement in collective bargaining negotiations covering workers employed by the Turkish Coal Enterprise (TTK) and the Mining Research and Exploration Agency (MTA).
Vice President Cevdet Yılmaz met with TÜRK-İŞ President Ergün Atalay on the evening of Thursday, 22 July. Following a four-hour meeting, Atalay stated, “They presented us with an offer this evening. We exceeded 16.11 but did not reach 16.57. It is close to that figure. But let them see what it is. The unions will decide, the workers will decide. If the workers are satisfied, there is no problem; if they are not satisfied, we will say “no” and walk away.”
DİSK-AR: Broadly defined unemployment hits a historic record of 13.4 million
The DİSK-AR unemployment report stated that broad-based unemployment reached a historic high of 13.4 million. According to calculations made by DİSK-AR using TÜİK data, the seasonally adjusted broad-based unemployment rate stood at 13 million 383 thousand in June 2025. It was stated that the narrowly defined unemployment rate, which was 3 million 228 thousand in June 2023, was 3 million 253 thousand in June 2024 and 3 million 47 thousand in June 2025. Although the broad definition of unemployment fell from 9.1% to 8.6% between June 2024 and June 2025, the increase in the broad definition of unemployment accelerated. It was stated that the broad definition of unemployment, which was 29.2% in June 2024, rose to 32.9% in June 2025, an increase of 3.7 points in the last year. It was also noted that the number of broadly defined unemployed individuals, which stood at 11.7 million in June 2024, rose to 13.8 million in June 2025. This represents an annual increase of 1,643,000 in the number of broadly defined unemployed individuals.
IMF raises growth forecasts for Turkey and the global economy
The IMF published the July edition of its World Economic Outlook report under the title ‘Global Economy: Weak Resilience in a Persistent Uncertainty Environment.’ The report stated that global economic growth is expected to be 3 per cent in 2025 and 3.1 per cent in 2026.
The report states that the Turkish economy is expected to grow by 3% this year and 3.3% next year. In its April forecasts, the IMF had predicted that the Turkish economy would grow by 2.7% this year and 3.2% next year.
The report noted that the global economic growth forecast for this year is 0.2 percentage points higher than the April forecast, and the 2026 forecast is also 0.1 percentage points higher.
The report stated that global headline inflation is expected to decline to 4.2 per cent in 2025 and 3.6 per cent in 2026, adding that inflation is expected to remain above target in the United States and more moderate in other major economies.
The report noted that the growth forecast for the US economy was raised from 1.8% to 1.9% for 2025, emphasising that the growth forecast for next year was raised from 1.7% to 2%. The growth forecast for the Eurozone economy was raised from 0.8% to 1% for this year and remained unchanged at 1.2% for 2026.
The growth forecast for the Chinese economy was raised from 4% to 4.8% for this year and from 4% to 4.2% for next year.
Stock investors have returned to levels seen two years ago
The number of stock investors fell to 6.42 million as of yesterday. According to a report by Ekonomim newspaper, stock investors, who lost more than 2 million from their historic peak of 8.55 million in October 2023, have lost interest in the stock market due to the volatile market caused by tensions and increased interest in fixed-income investments. A new initial public offering (IPO) process is needed to see an increase in the number of stock investors.
The Central Bank’s reserves have been rising for five weeks
The Central Bank’s total reserves increased by 3 billion 332 million dollars in the week ending 25 July, rising from 83 billion 303 million dollars to 86 billion 625 million dollars. Thus, reserves have continued to rise for five consecutive weeks, reaching the highest level since 21 March 2025, when they stood at 88 billion 328 million dollars.
Gold reserves decreased from 85 billion 266 million dollars to 85 billion 222.5 million dollars. As a result, total reserves rose from 168 billion 569 million dollars to 171 billion 847.5 million dollars.
Mehmet Şimşek: Our reserves have returned to mid-March levels
Treasury and Finance Minister Mehmet Şimşek said, ‘Due to developments in March, it was a difficult period in terms of domestic politics.’ Şimşek said, ‘Our reserves were above $170 billion in mid-March and are now back to that level.’ Speaking on Kanal 7 television, Şimşek defended that good management had been demonstrated when looking at the ‘big picture,’ emphasising that frost and drought had negatively impacted food inflation, and stated that the year-end inflation forecast was between 24% and 29%.
Meanwhile, Central Bank Governor Fatih Karahan, who delivered a presentation titled ‘Monetary Policy and Macroeconomic Outlook’ in Kayseri, highlighted that reserves increased by 105 billion dollars and KKM balances decreased by 130 billion dollars.
Karahan stated that they would not allow shocks to disrupt the disinflation process, saying, ‘The disinflation process that began in June 2024 is continuing uninterrupted. We expect inflation to remain within our forecast range by the end of the year.’
Household inflation expectations rose to 54.5%
According to the Central Bank’s Sectoral Inflation Expectations Survey published for July, annual inflation expectations rose to 54.5% for households.
In July, annual inflation expectations for the next 12 months decreased by 1.2 percentage points to 23.4% for market participants and by 0.8 percentage points to 39.0% for the real sector, while they increased by 1.5 percentage points to 54.5% for households compared to the previous month. The percentage of households expecting inflation to decrease over the next 12 months decreased by 4.1 percentage points compared to the previous month, reaching 26.6%.
The trade deficit increased by 38.8%
According to provisional foreign trade data produced within the scope of the general trade system in collaboration with TÜİK and the Ministry of Trade, exports in June 2025 increased by 7.9% compared to the same month of the previous year, reaching 20 billion 515 million dollars, while imports increased by 15.2%, reaching 28 billion 688 million dollars. The foreign trade deficit increased by 38.8% compared to the same month of the previous year, rising from 5.89 billion dollars to 8.17 billion dollars. The export-to-import coverage ratio stood at 76.4% in June 2024, while it decreased to 71.5% in June 2025.
In the January-June period, exports increased by 4.1% to 131 billion 408 million dollars, while imports increased by 7.2% to 180 billion 845 million dollars. The foreign trade deficit also increased by 16.3% in the January-June period, rising from 42 billion 504 million dollars to 49 billion 437 million dollars. The ratio of exports to imports was 74.8% in January-June 2024, while it decreased to 72.7% in the same period of 2025.
Prof. Dr. Kara: We are now an expensive country for tourism
Bilkent University faculty member and former Chief Economist of the Central Bank, Prof. Dr. Hakan Kara, assessed that while a 4% increase in tourist numbers is expected worldwide in 2025, this increase will only reach 1.7% in Turkey in the first half of the year. Kara stated that this limited increase ‘confirms that we are now an expensive country.’
In a post on social media, Kara also stated that the increase in tourism revenue in dollars is misleading, saying, ‘Per capita tourist spending has increased by 29% over the past 10 years, but during the same period, inflation in the US was 35%. This shows that real income per tourist has declined.’
Culture and Tourism Minister Ersoy announced that a record revenue of 25.8 billion dollars was achieved in the first six months of the year.
Koç Holding reported 29.6 billion dollars in revenue for the first half of the year
Koç Holding generated consolidated revenue of $29.6 billion in the first half of 2025, while making combined investments of approximately $1.8 billion. This brings the group’s total combined investment to $15.2 billion over the past five years. Koç Holding CEO Levent Çakıroğlu highlighted the group’s leading role in Turkey’s production and exports, stating, ‘Our group makes a significant contribution to the country’s economy with combined revenues exceeding 7% of national income and a share of over 7% in Turkey’s exports.’
TCMB meeting minutes: Inflation risk has not been eliminated
The summary of the meeting held on 24 July by the Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey (CBRT) has been published. While it was noted that inflation expectations and pricing behaviour still pose risks, cautious optimism regarding the disinflation process has been maintained. Global uncertainties and geopolitical risks are being closely monitored, while credit and deposit markets and the real value of the Turkish Lira play a critical role in monetary policy. The summary noted that leading indicators point to a temporary increase in monthly inflation in July due to month-specific factors, stating, ‘Inflation expectations and pricing behaviour continue to pose risks to the disinflation process.’
Economic confidence at its lowest level in 10 months
The economic confidence index decreased by 0.4% month-on-month in July to 96.3. This is the lowest level since September 2024. The Turkish Statistical Institute (TÜİK) released the economic confidence index data for July. According to the data, the index decreased by 0.4% in July, reaching 96.3, compared to 96.7 in June. The consumer confidence index decreased by 1.38% on a monthly basis in July, reaching 83.5.
During the same period, the real sector confidence index increased by 0.5% to 98.9. The services sector confidence index decreased by 0.8% to 110. The retail trade sector confidence index decreased by 0.5% to 107.9, while the construction sector confidence index increased by 2.2% to 88.8.
An economic confidence index above 100 indicates optimism about the general economic situation, while an index below 100 indicates pessimism.
A total 60% of retail expenses are rent
The continuing exorbitant increase in commercial property rents has become the biggest dilemma for the retail sector and small businesses. While sales figures lag behind inflation, the share of rent in fixed expenses has reached 60%. Istanbul has topped the global rankings with a 193% increase in rents over five years, measured in dollars, while store rents in areas like Teşvikiye and Bağdat Caddesi have reached millions of liras. According to industry representatives, this situation is triggering both store and factory closures.
Oil prices are rising, Barclays issues warning: Risk exists
Oil markets have been on the move. Crude oil prices rose after US President Donald Trump adopted a tougher stance on ending the Ukraine-Russia war. Brent and West Texas crude oil prices rose 6.33% in the week ending 31 July.
Brent crude oil rose to $72 per barrel and West Texas crude oil rose to $62.5 per barrel. Barclays analysts warned of excessive increases and risks for oil prices, saying, “This situation reinforces our view that geopolitical tensions remain and continue to pose asymmetric upside risks to oil prices.
President Trump’s patience with Russia seems to be running out. Oil markets have also reacted to some extent to the possibility of a supply disruption.”
Fed kept interest rates unchanged, Trump spoke harshly again: A loser
The US Federal Reserve (Fed) kept interest rates unchanged at 4.25-4.50 per cent. Fed Chairman Jerome Powell said at a press conference that despite high uncertainty, the economy was in a strong position and unemployment remained low, but reiterated that inflation was slightly above the long-term target of 2 per cent.
US President Donald Trump continued his criticism after the interest rate decision, targeting Powell. Trump said of Powell, ‘He is very stupid and a total loser. He is a complete loser, and our country is paying the price.’
Treasury Secretary Scott Bessent said that he had prepared a list of candidates for Trump to choose from for the new Fed chair and expected an announcement by the end of the year.
Powell responded to Trump’s statement that ‘I heard they are going to cut interest rates in September’ by saying, ‘No decision has been made yet for the September meeting.’
The US economy grew above expectations
The US economy grew by 3% in the second quarter of the year, exceeding expectations. Market expectations were for growth of 2.5%. The economy had contracted by 0.5% in the first quarter of the year. The growth in the second quarter was driven by a decline in imports and an increase in consumer spending. During the same period, investments and exports declined. The personal consumption expenditure price index rose by 2.1% in the second quarter of the year. The index had increased by 3.7% in the first quarter of the year.
The core personal consumption expenditure price index, which excludes food and energy expenditures, also increased by 2.5% during the same period. The expectation was for a 2.4% increase, and the index had risen by 3.5% in the first quarter.
Jobless claims increased in the United States
According to a statement by the US Department of Labor, the number of people filing for unemployment benefits for the first time rose by 1,000 to 218,000 in the week ending 26 July, compared to the previous week. Market expectations were for the number of unemployment insurance claims to reach 222,000. The number of unemployment insurance claims in the previous week was 217,000. As of last week, the four-week average number of unemployment insurance claims decreased by 3,500 to 221,000.
Trump: We will not allow anyone to attack the dollar
US President Donald Trump said that BRICS is an ‘anti-US group targeting the dollar’ and added, ‘We will not allow anyone to attack the dollar.’ Trump claimed that India is a friend and ally of the US but does not treat the US fairly in trade.
Commenting on the 25% tariff to be imposed on India, Trump said that he is friends with Prime Minister Narendra Modi but that the two countries do not engage in much trade. Targeting BRICS, which includes Brazil, Russia, India, China and South Africa among its founders, Trump said, ‘You know, there is a group of countries called BRICS that is basically against the United States, and India is a member of that group. This structure is an attack on the dollar. We will not allow anyone to attack the dollar.’
Trump, who noted that the United States has a significant trade deficit with BRICS countries, emphasised that he would not allow this to continue during his presidency.
A compromise has been reached in the EU-US customs tariff dispute
The EU and the US have reached an agreement on customs duties. According to the agreement, the US will impose a 15 per cent customs duty on most imports from the EU, while Europe will not respond with new tariffs. Donald Trump and Ursula von der Leyen also shook hands in Scotland on the supply of comprehensive energy resources and weapons systems from the US. According to Eurotopics, the European press is analysing various aspects of the agreement and drawing its own conclusions.
According to the French economic newspaper Les Echos, the US has not achieved a major victory. The newspaper’s commentary can be summarised as follows:
“The President of the European Commission was not in a position to achieve more. It would have been wiser to stop the war initiated by the White House. … Although there are still some unresolved uncertainties, Brussels has secured guarantees for important sectors such as automotive, aviation and beverages, and has strengthened its own regulatory principles, particularly in the digital sphere. … The US’s ‘victory’ should also be assessed relatively, because the losses incurred by this protectionist game for everyone must never be forgotten – the US will pay the price for short-term budget gains with high inflation and low growth.”
The Italian Corriere della Sera, on the other hand, emphasises that the price of stability is high and that this is not a fair deal. The newspaper’s perspective is as follows: “The EU is paying a heavy price for “stability” in its relations with the US. Essentially, this is the result of a political compromise: the EU wanted to avoid direct conflict with the US. Before the Trump era, the average tariff rate applied by US customs authorities on goods from Europe was around 4.8%. Today, this rate has been raised to 15%. In other words, the tax rate has been tripled without any legitimate economic justification. Contrary to Trump’s claims, there is no concrete evidence that Europe has exploited the US in recent years.”
Belgian newspaper De Standaard commented, ‘Trump took a gamble and won, because he single-handedly rewrote the rules of a game that had been established through decades of multilateral negotiations. The 15 per cent rate cannot be described as a fair outcome. In Trump’s world, the US is now enriching itself by shifting the cost onto its trading partners.’
The Irish Times also notes, ‘The agreement has a major advantage. It has prevented a tariff war between the two sides that could have had very bad consequences. A violent conflict involving retaliatory measures could have ensued. However, the skirmishes have now ended, and the trade weapons have been put back in their sheaths, at least for now.’
