ISTANBUL, September 1, 2026 — Türkiye’s economy grew 2.3% year-on-year in the second quarter of 2026, supported largely by household consumption, but the expansion fell short of market expectations of 2.5%-2.9%.

The latest figures from the Turkish Statistical Institute (TÜİK) showed that the economy continued to face challenges from slowing investment, weaker industrial activity and a contraction in construction. Agriculture and foreign trade, however, provided positive contributions to growth.

GDP Exceeds $1.7 Trillion

GDP at current prices rose 36.0% year-on-year to 19.87 trillion Turkish liras in the second quarter. In U.S. dollar terms, quarterly GDP stood at $438.35 billion, while the annualized size of the economy exceeded $1.7 trillion.

On a seasonally and calendar-adjusted basis, the chained volume index increased 1.1% quarter-on-quarter.

Agriculture and Industry Support Growth

Agriculture expanded 13.3% in the second quarter, continuing its strong performance for a second consecutive quarter. The sector contributed 0.45 percentage points to overall growth.

Industry also returned to positive territory following its contraction in the first quarter. Industrial output increased 2.4% year-on-year, contributing 0.46 percentage points to GDP growth.

Manufacturing industry output likewise rose 2.4%, contributing 0.39 percentage points. However, economic activity remained weaker than in previous periods, indicating that the industrial recovery is still losing momentum.

Construction Contracts for First Time in 14 Quarters

The construction sector contracted for the first time in 14 quarters, shrinking 1.9% in the second quarter and reducing overall economic growth by 0.11 percentage points.

Construction had recorded strong growth in recent years, partly due to reconstruction activity following the February 2023 earthquake. However, the fading impact of earthquake-related projects and weaker demand caused by high interest rates are expected to keep the sector under pressure in coming quarters.

Trade, transport and accommodation services grew 0.5%, contributing 0.12 percentage points to GDP. Information and communication services expanded 8.6%, while financial and insurance activities grew 2.1%.

Real estate activities increased 2.1%, professional, administrative and support services rose 2%, while public administration, education, human health and social work activities grew 4%.

Consumer Spending Remains Main Growth Driver

Household consumption remained the biggest contributor to economic growth, although its pace slowed.

Household consumption increased 3.5% year-on-year in the second quarter, contributing 2.33 percentage points to overall GDP growth, compared with 5.1% growth in the first quarter.

On a seasonally and calendar-adjusted basis, however, household consumption fell 1.3% from the previous quarter, indicating a loss of momentum in domestic demand.

Government Consumption Falls, Investment Slows

Government consumption declined 1.8% in the second quarter, reducing growth by 0.21 percentage points.

Total investment increased only 0.6%, contributing 0.16 percentage points. Construction investment fell 0.9%, while machinery and equipment investment rose 1.6%, slowing compared with previous quarters.

The slowdown in investment was attributed partly to tight monetary policy and difficulties in accessing financing.

Foreign Trade Turns Positive After Six Quarters

Exports declined 3.4% year-on-year in the second quarter, reducing growth by 0.76 percentage points.

Imports, meanwhile, fell 6.4%, but their decline provided a positive contribution of 1.33 percentage points to GDP. As a result, the net contribution from foreign trade turned positive for the first time in six quarters, reaching 0.57 percentage points.

Inventory changes, however, had a negative impact of 0.55 percentage points on growth.

Growth Outlook Remains Moderate

The second-quarter figures point to a loss of momentum in domestic demand, with slower household consumption, weaker investment and declining government consumption.

Economists expect Türkiye’s growth to remain around 3% for 2026. Higher oil prices caused by geopolitical tensions could put additional pressure on external demand, while monetary policy decisions by the Central Bank of the Republic of Türkiye (CBRT) will also influence the growth outlook.

Şimşek: Growth Expected to Gradually Accelerate

Treasury and Finance Minister Mehmet Şimşek said Türkiye’s strengthening macroeconomic fundamentals were increasing the economy’s resilience to shocks.

He said progress in the disinflation process and more supportive global conditions should allow growth to gradually accelerate in the coming period.

Şimşek also said the government would set out its roadmap for the 2027-2029 Medium-Term Program, focusing on price stability, technological transformation, productivity gains and sustainable improvements in prosperity.

Source: Patronlar Dünyası/ Prepared by: İlayda Gök