The World Bank on Tuesday revised its growth forecast for Türkiye upward for 2025, citing continued economic momentum and favorable external conditions, even as it slightly lowered expectations for next year.
In its twice-yearly Global Economic Prospects report, the 189-country lender said it now sees the Turkish economy expanding by 3.1% in 2025, up from its previous estimate of 2.6% made in January.
The upward revision stemmed from what the bank said was the previous momentum, including stronger-than-expected growth in the final quarter of 2024, and lower global oil prices.
Türkiye's growth eased slightly to 3.2% in 2024, mainly due to aggressive monetary tightening, aimed at combating high inflation that has almost halved over the last year.
Treasury and Finance Minister Mehmet Şimşek on Wednesday linked the improved expectations to confidence in the government’s economic program.
"While the World Bank has downgraded growth forecasts for nearly 70% of economies for 2025, it has increased Türkiye’s growth forecast by 0.5 percentage points," Şimşek wrote on the social media platform X.
"We will resolutely continue with our policies that reinforce the foundations of sustainable high growth."
The World Bank slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies.
The lender lowered its estimate for nearly 70% of all economies – including the U.S., China and Europe, as well as six emerging market regions – from the levels it projected six months ago before U.S. President Donald Trump took office.
In a forward to the latest version of the report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the "soft landing" – slowing enough to tame inflation without generating serious pain – it appeared headed for just six months ago.
"The world economy today is once more running into turbulence," Gill wrote. "Without a swift course correction, the harm to living standards could be deep."
Trump has upended global trade with a series of on-again, off-again tariff hikes that have increased the effective U.S. tariff rate from below 3% to the mid-teens – its highest level in almost a century – and triggered retaliation by China and other countries.
The World Bank is the latest body to cut its growth forecast as a result of Trump's erratic trade policies, although U.S. officials insist the negative consequences will be offset by a surge in investment and still-to-be-approved tax cuts.
For 2026, the bank slightly reduced its projection for Turkish gross domestic product (GDP) growth from 3.8% to 3.6%, as the effects of tight monetary policy and expected fiscal reforms are estimated to temper expansion.
For the global economy, the bank's forecast was lowered to 2.4% from 2.7%.
The report acknowledged Türkiye's ongoing efforts to rein in inflation through a combination of restrictive monetary policy and anticipated fiscal adjustments.
"Relatively moderate growth in 2025 reflects the effects of still-tight monetary policy, expected fiscal consolidation, and subdued global activity amid heightened uncertainty," the bank said.
Looking ahead, the World Bank projects that consumption will be the primary driver of growth in 2026 and 2027, supported by continuing disinflation.
"Export growth is likely to be limited by the real appreciation of the (Turkish) lira, subdued euro area demand, and uncertainty surrounding trade policies in major economies," the report read.
The Central Bank of the Republic of Türkiye (CBRT) pivoted to raising its key policy rate by 350 basis points in April to 46% and pushed the overnight lending rate to 49% after Turkish assets and the lira fell sharply after Istanbul Mayor Ekrem Imamoğlu was jailed pending trial over graft charges.
Before that, the bank had begun an easing cycle and gradually cut its one-week repo rate to 42.5% in March as inflation eased significantly from 75% it had reached in May 2024.
A sharper-than-anticipated slowdown in annual inflation to 35.41% in May has reignited speculation that the bank could resume rate cuts soon.
The World Bank stopped short of forecasting a global recession, but said economic growth this year would be the weakest outside of a recession since 2008. By 2027, global gross domestic product growth was expected to average just 2.5%, the slowest pace of any decade since the 1960s.
The report forecast that global trade would grow by 1.8% in 2025, down from 3.4% in 2024 and roughly a third of its 5.9% level in the 2000s. The forecast is based on tariffs in effect as of late May, including a 10% U.S. tariff on imports from most countries. It excludes increases that were announced by Trump in April and then postponed until July 9 to allow for negotiations.
The World Bank said global inflation was expected to reach 2.9% in 2025, remaining above pre-COVID-19 levels, given tariff increases and tight labor markets.
"Risks to the global outlook remain tilted decidedly to the downside," it wrote. The lender said its models showed that a further increase of 10 percentage points in average U.S. tariffs, on top of the 10% rate already implemented, and proportional retaliation by other countries, could shave another half of a percentage point off the outlook for 2025.
Such an escalation in trade barriers would result "in global trade seizing up in the second half of this year... accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets," the report said.
Nonetheless, it said the risk of a global recession was less than 10%.
The bank predicted that the U.S. economy – the world's largest – would grow half as fast (1.4%) this year as it did in 2024 (2.8%). That marked a downgrade from the 2.3% U.S. growth it had forecast back for 2025 back in January.
The Chinese economy is forecast to see growth slow from 5% in 2024 to 4.5% this year and 4% next. The world's second-largest economy has been hobbled by the tariffs that Trump has imposed on its exports, by the collapse of its real estate market and by an aging workforce.
U.S. and Chinese officials said on Tuesday they had agreed on a framework to get their trade truce back on track and remove China's export restrictions on rare earths while offering little sign of a durable resolution to longstanding trade tensions.
The World Bank expects the 20 European countries that share the euro currency to collectively grow just 0.7% this year, down from an already lackluster 0.9% in 2024.
Trump's tariffs are expected to hurt European exports. And the unpredictable way he rolls them out – announcing them, suspending them, coming up with new ones — has created uncertainty that discourages business investment.
India is once again expected to be the world's fastest-growing major economy, expanding at a 6.3% clip this year. But that's down from 6.5% in 2024 and from the 6.7% the bank had forecast for 2025 in January.
In Japan, economic growth is expected to accelerate this year – but only from 0.2% in 2024 to a sluggish 0.7% this year, well short of the 1.2% the World Bank had forecast in January.
The lender said emerging markets and developing economies were expected to grow by 3.8% in 2025 versus 4.1% in the forecast in January.
Poor countries would suffer the most, the report said. By 2027, developing economies' per capita GDP would be 6% below pre-pandemic levels, and it could take these countries – minus China – two decades to recoup the economic losses of the 2020s.
