Osman Şenkul
What does economic growth mean to you? For example, are you very happy when the economy grows? Do you hope that you will definitely benefit from this growth in some way?
Or are you one of those who say, “We benefited well from the previous economic growth; now we are looking forward to future growth. I don’t call growth anything less than 5 per cent, mate”?
Regardless of which group you belong to, do not have such high expectations for growth in 2025. No matter how much you work on the data, you will see that growth will not exceed 3.0 per cent.
Some of you may say, “God bless that. The world cannot see that much. Turkey is achieving the highest growth among large countries.”
However, we must not forget that in countries with three to four times Turkey’s domestic income relative to a population of 25-30 million, 1.0 per cent growth corresponds to 7-8 per cent growth in Turkey.
In short, when it comes to growth, everyone needs to look at their own stature first. While the government and its inner circle have been boasting for years that “We have grown…”, they are not really concerned with the issue of stature, of course.
According to the Turkish Statistical Institute (TurkStat), Turkey’s economy grew by 3.2 per cent in 2024; it grew by 2.0 per cent in the first quarter of 2025 and by 4.8 per cent in the second quarter.
Looking at these figures, the economy grew. But what happened as a result of this growth? The economy of minimum wage earners, who constitute more than half of the workforce, not only failed to grow but continued to decline.
According to TurkStat data, consumer prices rose by approximately 138 per cent between December 2022 and December 2024, and by 21.5 per cent as of August. During the same period, the minimum wage increase remained at 93.8 per cent; in other words, inflation took away nearly 1.4 times the increase in the minimum wage.
However, even though it benefits the vast majority not at all, when it comes to growth, the egos of those in the ruling circles swell; everyone gets caught up in the “our country is growing” hype. The administration, knowing this ‘national ego’ well, constantly tries to inflate the figures and immerse people in dreams of growth.
However, with domestic savings falling to 12 per cent, there is no growth, no investment and no job creation when there is no “cash in hand”.
According to World Bank data, the household savings rate in Turkey, which stood at 30.3 per cent in 2021, fluctuated between 20 and 25 per cent this year.
Data from the CEIC (Global Economic Data, Indicators, Charts and Forecasts) centre, established by a group of economists and covering over 200 economies, 20 industries and 18 macroeconomic sectors, also show that Turkey’s gross savings rate stood at 23.9 per cent in the last quarter of 2024.
In short, this process has seen a significant decline in household savings across the country. So what remains for growth? To demonstrate ‘growth’, it is necessary to create the conditions for showing growth step by step, without exaggerating it. Therefore, it is also necessary to create the conditions for maintaining growth at a stable rate. The most important condition for this is, of course, that the balance of payments, which has long been referred to as the “soft underbelly of the Turkish economy”, is truly balanced.
The deficits commonly known as the ‘current account deficit’ stem from importing more than is produced across all sectors, from industry to services and even agriculture. The Turkish economy continues to run a deficit regardless of whether it exports or imports. In many sectors, to export $100 worth of goods, more than $50 worth of imports must be made. Depending on the sector, this requirement can reach $70-80. The International Monetary Fund (IMF) assessed this situation in its recent reports as follows:
“Turkey’s structural policies should aim to increase the competitiveness of domestic goods relative to imports and move export products higher up the value chain. Over the past decade, Turkey’s strong export volume growth figures have not met high import needs. In addition, the increase in export value has begun to lag behind the increase in export volume.”
Exporters from various sectors are, of course, at the forefront of closing Turkey’s aforementioned gaps; the more they export, the more the gaps can be closed and, consequently, the necessity to incur high-cost debt due to high CDS can be reduced to some extent.
Turkey’s total exports rose by 2.5 per cent to $262 billion in 2024, with the European Union leading the way among the top export destinations that same year, accounting for $99 billion 355 million 460 thousand dollars. However, the EU, which accounts for 37.8 per cent of Turkey’s total exports, will begin implementing a carbon tax on 1 January 2026, the world’s first large-scale border tax on carbon-intensive goods. According to experts, this step, which has the potential to completely transform global trade, is being taken as part of the bloc’s efforts to reduce greenhouse gas emissions from heavy industry and promote cleaner production processes worldwide.
From 1 January next year, the EU’s Carbon Border Adjustment Mechanism (CBAM) will impose a significant cost on goods such as steel, fertiliser, cement, aluminium and hydrogen imported from outside the 27-nation bloc. Under the terms of the scheme, importers bringing these goods into the EU will be required to purchase CBAM certificates to cover the associated emissions. The cost of these certificates is expected to be in line with the EU Emissions Trading System (ETS) market price.
Let us now turn to the situation regarding products exported from Turkey to the EU. According to data from the Ministry of Trade, within the scope of the application, exports of cement, iron and steel, aluminium, fertiliser, hydrogen and electricity from Turkey to the EU accounted for 42 per cent of total exports. This means that to export nearly half of the products purchased by the EU, Turkey’s “largest customer,” it will be necessary to purchase these high-cost CBAM certificates; in other words, the costs of exporting these products will increase, and therefore a decline in exports may occur.
Most likely, domestic producers, who were aware of this situation in advance, began to slow down towards the end of the year; because, according to the newly announced Turkey Manufacturing Purchasing Managers’ Index (PMI) data, the contraction in production continues.
According to a statement by the Istanbul Chamber of Industry (ISO), “The trend of deterioration in the operating conditions of Turkey’s manufacturing sector continued at the end of the third quarter of 2025,” and the PMI fell to 46.7. The İSO statement said, “The PMI is a single-digit, composite performance indicator designed to reflect the performance of the manufacturing industry. The headline indicator is derived from new orders, production, employment, suppliers’ delivery times and input stocks. All figures measured above 50.0 indicate an overall improvement in the sector.”
Consequently, the headline PMI, which stood at 47.3 in August, fell to 46.7 in September, indicating that the manufacturing sector continued to slow down. Thus, the trend of deteriorating operating conditions has now lasted for one and a half years. The statement said:
“Feedback from survey participants indicated that challenging demand conditions persisted for firms. This led to a further slowdown in new orders and exports, resulting in a marked decline in manufacturing output. The weakening of new orders allowed manufacturers to reduce their backlogs, with this decline reaching its highest level in nearly a year. Companies added unsold finished products to their inventories, and thus post-production inventories recorded their first increase in the last three months.”
In this case, we can say that supporting the balance of payments depends on exports of products other than the aforementioned industrial products to the EU. However, the situation for products representing the other half of exports to EU countries does not look very positive either.
According to a report by Ekonomim Newspaper, the number of products exported from Turkey to the EU but returned on the grounds that they contained pesticide (agricultural chemicals) or aflatoxin (mould disease) levels far exceeding permitted limits is increasing daily.
According to data from the EU’s Rapid Alert System for Food and Feed (RASFF), Turkey topped the list with 384 notifications in the first nine months of 2025. China followed Turkey with 223 notifications. The fruit and vegetable group ranked first among products exported from Turkey to the EU with 169 notifications.
This was followed by nuts, seeds and kernels (89), spices and herbs (30), poultry meat and products (24), and fig confectionery derivatives (15). In addition, diet foods and supplements (12), cereals and bakery products (10), cocoa/tea/coffee products (8), food contact materials (5) and other food products (5) were also subject to notifications.
Dried figs topped the list with over 70 reports due to aflatoxin and ochratoxin A. Peppers received over 20 reports due to various pesticide residues, while grape leaves, pears, apricots, tomatoes and pomegranates were also among the other prominent products. The majority of notifications were due to mycotoxins (particularly aflatoxins), pesticide residues, and microbiological risks (particularly salmonella).
Germany (99 notifications) ranked first among the countries that issued the most notifications regarding products originating from Turkey. Along with Germany, Bulgaria (49), Italy (48), the Netherlands (33), and France (28) made up the top five on the list.
In this situation, it is understood that in the coming period, Turkey’s ‘largest export customer’ will experience significant reductions in its support for improving the balance of payments. In other words, economic growth will not be ‘for everyone’ but, as has been the case for many years, only the ‘leftovers’ from possible growth will be for the vast majority of everyone.