Turkey’s official gross domestic product (GDP) expanded by 2.0% y/y in 1Q25 after growing 3.0% y/y in 4Q24, the Turkish Statistical Institute (TUIK, or TurkStat), said on May 30.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

The market expectations for the annual reading ranged between 1.5% to 4%.

TUIK also stated that the 1Q25 growth rate was 1.0% q/q versus the 1.7% q/q posted for 4Q24.

Exit from a technical recession

For 2024, TUIK provided an official release of 3.2% y/y compared to the 5.1% y/y recorded for 2023.

For 4Q24, TUIK registered a "strong" 1.7% q/q growth figure while updating the 3Q24 figure to a 0.1% q/q contraction from the previously provided 0.2% q/q contraction.

As a result, Turkey exited its technical recession, which officially lasted across the second and third quarters of last year.

Output gap negative

The output gap turned negative (official GDP growth releases have fallen below potential growth, which can be simplified as long-term average growth) in 3Q24 and was poised to remain there, according to the central bank.

Treading carefully

After meeting the financial industry’s hopes by declaring the technical recession across 2Q24 and 3Q24, it was thought that the Erdogan regime had gained an upper hand, offering it a return to its old habit of releasing some big bold numbers.

However, the first-quarter GDP release suggests that the regime is treading carefully.

In the quarter, the central bank burnt through around $50-60bn of FX reserves as it sought to overcome market stress created by the jailing of Istanbul mayor and presidential candidate Ekrem Imamoglu in mid-March and tensions stoked by Donald Trump’s tariffs clamour at the beginning of April.

With May, the bleeding away of the FX reserves stopped. In the past few weeks, the central bank has been slowly rebuilding the reserves again.

It could be said that the regime has overcome the market stress. Yet, despite the progress, it appears that officials do not feel empowered enough to move on aggressively.

Above 4% in 2025?

In September, the Erdogan administration provided an official GDP growth release target of 4% y/y for 2025 in the new medium-term economic programme (OVP).

On March 1, a day after the 4Q24 data was released, bne IntelliNews anticipated: “Above 4% for 2025.” And despite the regime’s tentative approach to the first quarter, the 4% bet still stands.

On September 1, TUIK will release its 2Q25 data.