Turkey’s economy grew in line with expectations in both the last quarter of the year and throughout 2025. Growth was mainly driven by construction and household consumption, while agriculture and foreign trade weighed on performance. For 2026, growth expectations are above 4%.
The Turkish economy expanded by 3.4% in the final quarter of the year and by 3.6% overall in 2025. Both in the last quarter and throughout the year, growth was primarily supported by household consumption and construction investments. However, the slowdown in industry, contraction in agriculture, and decline in exports drew attention. In 2026, growth is expected to exceed 4%. In the final quarter, the share of labor compensation in GDP fell to its lowest level of the year at 33.7%, while the share of capital rose to a yearly high of 49.1%.
GDP Exceeds $1.5 Trillion
The Turkish Statistical Institute (TÜİK) announced annual and fourth-quarter growth data. Accordingly, in 2025, Turkey’s economy reached 63.02 trillion lira at current prices, while in dollar terms it exceeded $1.596 trillion for the first time in history. Adjusted for seasonal and calendar effects, the economy grew by 0.4% quarter-on-quarter in the final quarter.
According to the production-based GDP calculation, the contraction in agriculture and slowdown in industry stood out, while construction, trade, transportation, and accommodation performed well in 2025. TÜİK data showed that agriculture shrank by 7.2% in the final quarter, reducing growth by 0.33 percentage points, and contracted by 8.8% in 2025 overall, lowering annual growth by 0.48 points. Agriculture has now contracted for four consecutive quarters.
Industry, after starting the year with a contraction, accelerated in the second and third quarters, but visibly slowed in the final quarter. The sector contributed only 0.17 points in the last quarter with 0.9% growth, and 0.54 points in 2025 overall with 2.9% growth. Apart from the defense industry, no significant momentum is observed in industry in the first quarter of this year.
Construction Grew in Double Digits in 2025
Construction was the standout sector of 2025. Supported by earthquake housing projects, the sector grew by 8.6% in the final quarter (contributing 0.4 points) and by 10.77% overall in 2025, making it the only sector to achieve double-digit growth and contributing 0.55 points to overall growth. The real estate sector grew by 2.71%, adding 0.25 points.
Trade, transportation, and accommodation expanded by 4.61% for the year, contributing 1.16 points. The finance and insurance sector grew by 3.81% annually (4.1% in the last quarter), contributing 0.21 points to the 3.6% annual growth.
Exports Contracted in 2025
According to the expenditure-based calculation, 2025 was a year in which exports declined. Household consumption accelerated in the last quarter, growing by 5.2% and contributing 3.65 points to growth. For the full year, household consumption grew by 4.07%, accounting for 2.8 points of the 3.6% annual growth. The fastest rise in consumer spending occurred in services, while spending on non-durable goods increased by 35%.
Government consumption made a negative contribution in the last quarter and grew only 0.83% for the full year, adding just 0.11 points.
Total investments rose by 5.4% in the final quarter (contributing 1.42 points) and by 6.95% in 2025 overall (contributing 1.77 points). However, this was largely driven by construction. Construction investments increased by 8.7%, while machinery and equipment investments rose by 2.8%.
Exports contracted by 2.3% in the final quarter and by 0.32% in 2025 overall, slightly dragging growth. Imports increased by 3.8% in the last quarter and 4.93% for the full year, creating nearly a 1-point negative impact. Overall, foreign trade reduced growth by 1.36 points in the final quarter and 1.06 points in 2025.
Share of Labor Income Declined
Labor compensation’s share of GDP fell to 33.7% in the last quarter, the lowest of the year, while the share of net operating surplus/mixed income rose to 49.1%. In 2025, labor compensation increased by 40.4%, while net operating surplus/mixed income rose by 44.2%. The share of labor in gross value added slightly declined from 37.0% in 2024 to 36.9% in 2025, while the share of net operating surplus increased from 43.1% to 44.1%.
“We Have Grown Uninterruptedly for 16 Years”
Vice President Cevdet Yılmaz stated that Turkey has maintained uninterrupted growth for 16 years, emphasizing that the effectiveness of the economic program and the strength of macroeconomic fundamentals have been reaffirmed. He noted that GDP reached $1.6 trillion and per capita income rose to $18,040. With sustained high growth, Turkey aims to become the world’s 16th-largest economy and join the high-income countries group.
Treasury and Finance Minister Mehmet Şimşek also highlighted that investments grew by 7% in 2025 and that machinery and equipment investments increased by 5%, strengthening production capacity. He added that despite global trade uncertainties negatively affecting net external demand, the current account deficit remained sustainable at 1.6% of GDP. The budget deficit was 2.9% of GDP, below medium-term program projections.
Business Community Reactions
Business representatives described the 3.6% growth as a significant achievement despite global uncertainties, trade protectionism, regional conflicts, and rising energy costs. However, they emphasized that limited growth in certain sectors—especially agriculture, which contracted by 8.8%—should be carefully examined and supported with targeted policies.
Industry leaders stressed the need to direct investments toward permanent capacity increases in manufacturing and to implement selective policies to offset agricultural contraction. They also called for strengthened support policies for domestic producers and agriculture, particularly in light of climate-related challenges such as frost and drought.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök