Regional declines and bright spots

The Brussels-based association, which collects data from 69 countries representing approximately 98% of global crude steel output in 2025, reported that the January-April period also saw a 2% drop year-on-year to 613.3 million tons. China, the world’s largest producer, saw its April output fall 2.8% to 83.6 million tons, with a 4.1% decline in the first four months to 331.1 million tons. The Middle East recorded the steepest regional fall, down 27.6% to 3.7 million tons, while Russia and other CIS countries plus Ukraine posted a 13.4% decrease to 6 million tons.

Türkiye stands out with strong growth

By contrast, several major producers saw gains. US crude steel output rose 9.4% to 7.2 million tons, India climbed 3.9% to 13.8 million tons, and South Korea increased 4.8% to 5.2 million tons. Türkiye’s crude steel production surged 9.4% year-on-year in April to 3.3 million tons, securing its seventh-place position among the world’s top 10 steel-producing nations. In the January-April period, Türkiye’s output rose 6.3% to 13 million tons. The European Union’s total output dipped 1.8% to 11 million tons, though Germany—the bloc’s largest producer—saw a 9.5% rise to 3.2 million tons. As a key player in global steel markets and a major supplier to construction and infrastructure projects across the region, Türkiye’s continued output growth underscores its industrial resilience amid global headwinds.

Crypto-assets under global scrutiny

Addressing a panel on preventing the misuse of financial innovation, Simsek described modern financial technology as a “double-edged sword.” He noted that while digital payment systems improve speed and accessibility, they also create opportunities for illicit actors to move money across borders with limited oversight.

According to Simsek, stablecoins have become a growing concern for regulators and international watchdogs because they allow fast and relatively anonymous transfers. Referring to assessments by the Financial Action Task Force (FATF), he said such digital assets are increasingly preferred by terrorist financiers due to their accessibility and ability to preserve value during cross-border transactions.

Türkiye highlights early regulatory steps

The minister said Türkiye moved quickly to strengthen anti-money laundering and counterterrorism financing regulations in the crypto sector. He explained that virtual asset service providers were brought under national AML and CFT rules in 2021, while compliance obligations and licensing requirements were expanded.

Simsek also pointed to additional measures introduced by Ankara, including restrictions on stablecoin transfers and a nationwide ban on crypto ATMs. He stated that authorities imposed daily and monthly transaction limits as well as waiting periods for transfers that fail to meet international compliance standards.

Call for faster international coordination

The Turkish minister argued that international cooperation remains critical because criminal groups can transfer funds globally within seconds. “When a suspicious wallet is identified, information must travel in hours, not weeks,” he said.

He warned that financial innovation will continue evolving rapidly, forcing governments and regulatory institutions to constantly adapt. Simsek added that uneven implementation of FATF standards across countries creates vulnerabilities that organized crime networks can exploit.

The Paris conference brought together policymakers and financial experts to discuss global efforts against terrorism financing, cybercrime and illicit digital transactions affecting international markets, including Europe, the Middle East and Türkiye.

Türkiye's consumer confidence index rose to 85.8 in May, reaching its highest level since March, the Turkish Statistical Institute (TurkStat) announced on Monday. The reading edged up from 85.5 in April as households grew more optimistic about future economic conditions.

Mixed signals in sub-indexes

Three of the four main sub-indexes posted monthly gains, with the general economic situation expectation over the next 12 months rising 3.9 percent, according to the data. The financial situation expectation for the coming year increased 0.5 percent, while the assessment on spending money on durable goods improved marginally by 0.04 percent.

The financial situation of households at present was the only component to decline, dropping 3.5 percent from the previous month. This deterioration suggests immediate economic pressures continue to weigh on Turkish consumers even as they anticipate better conditions ahead.

Economic sentiment gauge

The consumer confidence index serves as a key barometer of economic sentiment, reflecting household views on financial conditions and consumption intentions. Economists monitor the gauge for early signals of private spending trends in Türkiye's economy.

Geopolitical shocks and monetary response

Karahan noted that “extraordinary geopolitical developments” — specifically the US-Israel-Iran war that began in late February — forced major revisions to the bank’s assumptions. “The closure of the Strait of Hormuz poses a risk to global energy supply,” he said, adding that leading indicators point to slower global activity, higher input costs, and supply chain disruptions. Annual consumer inflation stood at 32.4% in April, while energy inflation surged 19 percentage points over the past two months to 47%, mainly due to oil and natural gas prices. Inflation expectations remain above the bank’s forecasts, with second-round effects posing key risks.

Policy stance and reserve build-up

The bank cut its policy rate by 100 basis points to 37% in January but held steady in March and April amid rising uncertainty. One-week repo auctions were suspended from March 1, pushing the reference money market rate to 40%. Karahan said monetary policy will remain tighter for longer than previously signalled. Gross reserves rose to 172 billion as of May 8 from 155 billion on March 27, while net reserves excluding swaps increased by 20 billion to 39 billion. Oil prices staying higher for longer are a key upside risk, while any easing of the war could support disinflation.

Participation banking expands in Türkiye

Speaking at the summit organized by Anadolu, Simsek said participation finance has become an increasingly important pillar of the Turkish banking sector over the past two decades. He explained that the share of participation bank deposits climbed from 3% to 11%, while total assets rose from 2.4% to nearly 10% during the same period.

Loan growth in the sector also accelerated, increasing from 4% to 8%, according to the minister. Simsek argued that participation finance institutions continue to outperform conventional lenders in several areas, including capital strength, profitability, and asset quality.

Global Islamic finance market grows rapidly

The minister stated that global participation finance assets are expected to approach $10 trillion by 2030, compared with nearly $6 trillion recorded in 2024. He described the sector as more resilient against volatility and capable of meeting rising international demand for alternative financial systems based on risk-sharing principles.

Simsek also emphasized that participation finance should not be viewed solely through banking activities. He called for broader development in areas such as insurance, investment funds, and financial technologies linked to Islamic finance principles.

Istanbul positioned as global finance hub

Türkiye is also working to strengthen the role of the Istanbul Financial Center as an international hub for participation finance. Simsek said the government will continue supporting regulatory reforms and market expansion efforts aimed at attracting regional and global investors to Istanbul.

The summit brought together banking executives, policymakers, and international finance representatives to discuss the future of participation banking and Türkiye’s role in the evolving global financial system.

Energy diversification shields economy

Addressing global energy concerns, Simsek said Türkiye has significantly diversified its oil and natural gas suppliers, reducing vulnerability to disruptions in the Strait of Hormuz. He noted that the Turkish economy now has minimal direct dependence on the strategic waterway despite ongoing regional tensions.

The minister acknowledged that fluctuations in global oil prices could affect Türkiye’s Medium-Term Economic Program but stressed that authorities are taking measures to preserve economic stability. He pointed to strong macroeconomic indicators, including a budget deficit ratio of 2.9% and public debt levels around 24% of national income.

Foreign reserves and markets strengthen

Simsek also highlighted the improving position of the Central Bank of the Republic of Türkiye, saying gross reserves increased from $100 billion to $166 billion. According to the minister, the reserve level now covers more than five months of imports, providing protection against external financial shocks.

He added that the market value of companies listed on Borsa Istanbul recently climbed from $425 billion to $516 billion, reflecting growing investor confidence in Türkiye’s financial markets and economic outlook.

Revenue breakdown and visitor spending

Out of the total income recorded between January and March, approximately $9.69 billion was generated directly from visitors, while transit passengers contributed an additional $201.9 million. A notable share of this revenue—over one quarter—came from Turkish citizens living abroad, reinforcing their importance to Türkiye’s tourism economy. Individual travel spending dominated the revenue structure, accounting for $8.47 billion, whereas package tours contributed $1.22 billion.

Visitor numbers and per capita expenditure

The number of people departing Türkiye during the quarter reached 9.26 million, marking a 1.5% annual increase. Among them, Turkish nationals residing abroad represented a significant portion, totaling 2.38 million. On average, international visitors spent $102 per night, while citizens living abroad recorded a lower nightly average of $72, indicating varied spending habits across visitor groups.

Key sectors driving tourism income

Food and beverage services led all categories, making up 27% of total tourism revenue. This was followed by international transportation at 15.8% and accommodation at 13%. Year-on-year comparisons show strong gains in several sectors, with accommodation spending rising by 21.2%, health-related tourism increasing by 18.4%, and food and beverage expenditures climbing 13.7%, reflecting diversified demand across the industry.

Travel purposes and outbound tourism trends

Leisure-related activities—including travel, entertainment, sports, and cultural experiences—remained the primary reason for visiting Türkiye, accounting for more than half of all trips. Visiting friends and relatives ranked second, while shopping represented a smaller share. Meanwhile, outbound travel by Turkish citizens increased sharply, with nearly 2.94 million people traveling abroad in the same period, up 13.1% from a year earlier. Their average expenditure reached $758 per person, signaling rising international mobility.

Turkiye has designated 2026 as a landmark year for economic restructuring, with Treasury and Finance Minister Mehmet Simsek presenting an ambitious framework aimed at elevating the nation's industrial capabilities and global financial standing. Speaking at the Powerhouse for Investment in the Turkiye Century conference in Ankara, Simsek outlined measures designed to accelerate value chain progression while strengthening the country's position as a regional trade and finance hub.

The reform agenda encompasses extensive infrastructure development including railway expansion alongside green and digital transition initiatives. These measures build upon President Recep Tayyip Erdogan's broader economic vision announced last week, targeting sustainable growth through enhanced productivity and technological advancement.

Export-oriented tax incentives

Manufacturer exporters will benefit from a dramatic reduction in corporate tax rates, with the standard levy dropping from 25 percent to a competitive 9 percent. This reduction aims to attract foreign direct investment into high-value manufacturing sectors, acknowledging that traditional outsourcing models from the 1990s no longer define global production patterns.

Service exports receive equal prioritization through complete corporate tax exemptions covering software development, digital gaming, medical tourism, educational services, and technical consultancy. Turkiye’s existing strength in this sector, demonstrated by a service export surplus exceeding 60 billion dollars, positions the country to capitalize on sectors resilient to global trade fragmentation.

Istanbul Finance Center incentives

The government has introduced substantial fiscal advantages for the Istanbul Finance Center, granting complete corporate income tax exemptions on transit trade for center-based enterprises while offering 95 percent relief for companies operating elsewhere. This enhancement expands upon the 50 percent exemption initially established in 2009.

Regional headquarters relocating to the financial center will enjoy two decades of corporate tax exemptions, with similar 95 percent relief available for headquarters established in other Turkish cities. Eligible employees may receive income tax exemptions approaching 3,000 dollars, contingent upon their organizations generating 80 percent of revenues from international markets.

Global wealth attraction mechanisms

A new non-domiciled status program offers Turkish citizens and international expatriates zero taxation on foreign-sourced income for twenty years, provided they have not maintained Turkish tax residency exceeding six months annually over the preceding three years. Participants benefit from reduced inheritance taxation of merely 1 percent, surpassing comparable European programs in Italy and Greece.

Service companies creating employment for fifty individuals may qualify for citizenship under streamlined procedures permitting entirely digital incorporation without physical presence requirements. The framework additionally facilitates asset repatriation to deepen domestic capital markets while establishing Terminal Istanbul at the former Ataturk Airport as a dedicated technology hub.

Economic foundations and future trajectory

Despite temporary moderation attributable to ongoing disinflation efforts, Turkiye's economic indicators demonstrate substantial resilience. National GDP reached 1.6 trillion dollars last year, exceeding the combined 1.3 trillion dollar output of eight neighboring nations. Since 2002, economic expansion has outpaced emerging market averages, with the national GDP index rising from 100 to 328.

Over the past two decades, Turkiye has attracted nearly 300 billion dollars in foreign direct investment, hosting 87,000 international companies. The current reform package extends investor benefits through 2047, offering two decades of policy visibility designed to establish Turkey as a friction-free destination for global capital seeking stable, long-term returns.

Development Road and Middle Corridor

Simsek explained that the Development Road is a major connectivity project comprising approximately 1,200-1,250 kilometers of railway line, a highway, and an energy corridor stretching from Basra to Türkiye. The United Arab Emirates, Qatar, and Iraq are all stakeholders in this initiative. The Middle Corridor, another key route connecting Asia to Europe, passes through Anatolia. The third bridge in Istanbul was designed with a wide railway connection as the most important component of this $8.1 billion project. International financial institutions will provide 83% of the project’s funding. Simsek also recalled that Türkiye signed an agreement with the World Bank to strengthen the Middle Corridor.

Strategic importance for Türkiye

For Türkiye, which sits at the crossroads of Europe and Asia, investing in these corridors is a strategic hedge against global trade fragmentation. The Development Road project, in particular, aims to provide an alternative to maritime routes that may become disrupted during regional conflicts, such as the ongoing Iran war and tensions in the Red Sea. Ankara sees these land-based corridors as critical for energy security, export diversification, and regional economic integration.

Economic outlook

The central bank stated that indicators point to a slowdown in economic activity, adding that potential second-round effects of recent developments on the inflation outlook will be of importance. “The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels,” the bank added. The decision reflects continued caution as Türkiye navigates global energy shocks and regional conflicts.

Rate trajectory

Starting from a high of 45%, the bank has gradually lowered the rate over the past year, bringing it down to 38% before cutting to 37% in January at the first monetary policy meeting of 2026. Thursday’s hold indicates that policymakers are assessing the impact of previous cuts while remaining vigilant against renewed inflationary pressures. For Türkiye, which imports nearly all its energy, elevated prices remain a key challenge to price stability.

Currency and commodity markets

As of 10:30 am local time (0730GMT), the exchange rate stood at 44.8787 Turkish liras per US dollar, 52.8460 per euro, and 60.8860 per British pound. Meanwhile, the price of an ounce of gold was $4,797.25, and Brent crude oil futures were trading at $95.2 per barrel. The slight pullback in the stock market came amid ongoing regional tensions and global economic uncertainty.

Market outlook

Investors are closely monitoring both domestic economic indicators and international developments, including US-Iran ceasefire negotiations and the situation in the Strait of Hormuz. Despite Monday’s dip, the BIST 100 remains near record levels, reflecting continued confidence in Türkiye’s economic resilience.

In his remarks, Secretary-General Ambassador Sohail Mahmood emphasized that education, science, and technology constitute vital pillars of D-8 cooperation, offering significant opportunities for strengthening institutional linkages and advancing collaborative initiatives. He particularly highlighted the D-8 Network of Pioneers for Research and Innovation (NPRI) as a flagship platform connecting leading Universities across D-8 Member States, currently comprising 28 prominent institutions. The Secretary-General encouraged more Pakistani Universities and institutions of higher learning to become part of NPRI through relevant national Ministries.

The Secretary-General also noted Pakistan’s important role in hosting key D-8 affiliated bodies -- including the D-8 NPRI Secretariat at COMSATS University, Islamabad; and the D-8 Research Center for Agriculture and Food Security (RCAFS) at the University of Agriculture, Faisalabad.

The delegation members commended the Secretariat’s efforts in promoting academic and scientific collaboration and expressed strong interest in expanding engagement with D-8 initiatives, especially within the NPRI framework.

They added that the delegation was visiting Türkiye to participate in the Eurasia Higher Education Summit (EURIE) 2026, which brought together a broad representation of Universities and institutions, reflecting Pakistan’s expanding higher education landscape and its commitment to international academic cooperation.

The exchanges in the meeting reflect a shared commitment among D-8 Member States to strengthen knowledge-based cooperation and foster innovation-driven development through enhanced collaboration in higher education, research, and technology.

Source: Press release from Developing-8 Organization for Economic Cooperation (D-8)

Strategic Timing amid Maritime Paralysis

The breakthrough comes at a critical moment, as the ongoing US‑Israeli war with Iran has effectively shut down maritime traffic through the Strait of Hormuz, the world’s most vital oil and LNG chokepoint. With sea routes blocked, land logistics through Türkiye have become indispensable for maintaining supply chains between Europe and the Gulf. Bolat noted that Ankara hopes the current 15‑day ceasefire will evolve into permanent stability, as the global economy urgently needs peace to prevent further shocks and prolonged price hikes.

Economic Confidence and New Opportunities

Bolat also highlighted that Türkiye’s e‑commerce sector has grown from 5% to 20% of total trade, making Turkish firms attractive targets for international investors seeking a stable bridge between Western and Chinese markets. He pointed to recent high‑level meetings in Portugal and Brussels as evidence of growing confidence in the Turkish economy, and noted that Portuguese authorities are actively inviting Turkish contractors to bid on €60 billion in infrastructure and housing projects. The EU, he added, is increasingly eager to form alliances with Türkiye’s rapidly expanding defence industry.

Falling US bond yields and capital flows

The ceasefire, brokered by Pakistan just hours before President Trump’s deadline, prompted a broad risk‑on rally in global markets. US Treasury yields fell across the curve: the 10‑year yield dropped 8 basis points to 4.24%, the two‑year fell 9 points to 3.73%, and the five‑year declined 9 points to 3.86%. Lower US yields typically encourage capital flows into emerging markets, and analysts expect Türkiye to benefit from this trend as international investors regain appetite for higher‑yielding assets.

Central Bank measures to support the lira

Throughout the conflict, Türkiye’s central bank took proactive steps to prevent excessive exchange rate volatility. Banks have resumed swap transactions with the central bank, signalling that there is no foreign exchange liquidity shortage and that the exchange rate regime is functioning as intended. These measures aim to avert a lira crunch, prevent banks from facing liquidity squeezes, and keep credit conditions more reasonable. With the ceasefire reducing geopolitical uncertainty, markets appear willing to price in positive developments going forward.

Trade targets and strategic sectors

Bolat stated that the two nations confirmed their commitment to achieving a balanced and sustainable trade volume. “We discussed all kinds of solutions and mechanisms to bring our bilateral trade, which reached $3.7 billion last year, to $5 billion first and then to the $10 billion target,” he said. The ministers agreed to deepen cooperation in strategic sectors including textiles, agriculture, food, and machinery, while also sharing regulatory information to ensure predictability in agricultural trade. A Türkiye-Syria Business and Investment Forum will be held alongside the meeting to connect leading companies and investors from both countries.

Syrian minister sees expansion opportunity

Syrian Economy and Industry Minister Mohammad Nidal al-Shaar noted that the two countries have special relations and are working on a solid foundation. “Rather than economic cooperation, there is of course an opportunity for expansion, and we have set out on this path,” he said. Al-Shaar confirmed that work continues on an industrial zone planned for Aleppo, which he said would have a direct positive impact on other projects and the overall business environment. Turkish and Syrian industrialists are actively involved in the initiative.

Additional agreements and Türkiye’s regional vision

Bolat also touched upon recent regional conflicts, stressing the importance of ensuring uninterrupted foreign trade through multiple alternative routes. During the JETCO meeting, the two countries signed a separate cooperation agreement covering product safety, inspection, technical regulations, standardization, conformity, and metrology. For Türkiye, which has consistently supported Syria’s reconstruction and stability, these deals reinforce Ankara’s role as a key economic partner in the Levant. By targeting $10 billion in bilateral trade, Türkiye aims to strengthen supply chains and reduce dependency on volatile global markets, while also offering Syrian businesses a gateway to European and Asian markets.

Energy prices and inflation link

Karahan emphasized that higher oil and natural gas prices are a key driver of cost-push inflation. “The ongoing war has led to a pronounced increase in energy prices,” he said, adding that the impact is not limited to fuel but spreads through production and supply chains. According to Central Bank calculations, a sustained 10% rise in oil prices could add around 1.1 percentage points to annual inflation, although policy tools such as the sliding-scale system help soften this effect.

Medium-term risks and economic outlook

Looking ahead, the Central Bank expects both supply-side disruptions and demand-side shifts to shape inflation dynamics. Supply constraints linked to the conflict have already begun to affect pricing, while uncertainty may weaken external demand and investment appetite. Karahan noted that higher energy costs could slow economic growth, estimating a potential reduction of up to 0.7 percentage points over a year under certain scenarios.

Current account and trade balance impact

The war also poses risks to Türkiye’s current account balance, primarily through rising energy imports. A $10 increase in oil prices could widen the energy deficit by several billion dollars annually. However, a moderation in domestic demand and imports may partially offset this effect, supporting the trade balance. Officials say the current account deficit remains below historical averages and manageable despite external pressures.

Policy response and financial stability

Karahan underlined that the Central Bank is maintaining a tight monetary stance to contain inflation expectations. Measures introduced since the escalation include liquidity management steps, foreign exchange operations, and support mechanisms to stabilize markets. “We are determined to ensure the tightness required for the continuation of the disinflation process,” he said.

Reserves and gold strategy

Addressing concerns over reserves, Karahan pointed to Türkiye’s increased gold holdings, which now account for more than 60% of total reserves. He confirmed that gold-backed transactions, including swaps, are being used to support foreign exchange liquidity. These tools, along with Turkish lira swap operations, are part of a broader strategy to maintain financial stability and strengthen confidence in the economy.

Expanding regional footprint

The agreement establishes a foundation for deeper collaboration between the two companies. Mikail Akbulut, CEO of Turkish Technic, expressed enthusiasm for welcoming “one of the largest air carriers in Central Asia” to the company’s growing customer network. “This long-term agreement will lay the foundation for a close collaboration in the future. With our years of experience in component pool services, we will ensure they can continue their operations efficiently,” Akbulut said, adding that he looks forward to a lasting and thriving partnership.

Leadership perspectives

Abdulaziz Abdurakhmanov, founder and CEO of Centrum Holding, hailed the deal as a major step toward strengthening operational reliability and efficiency. “Access to a comprehensive component support infrastructure will enable us to maintain high levels of operational continuity as we continue to expand our fleet and network across key regional and international markets,” Abdurakhmanov stated. He emphasized his confidence in Turkish Technic’s global expertise and the partnership’s role in supporting long-term growth and operational excellence.

Strengthening Türkiye’s aviation influence

The agreement underscores Türkiye’s growing stature as a hub for aviation maintenance and engineering services. Turkish Technic’s expanding portfolio across Central Asia reflects Ankara’s broader strategy of deepening economic and industrial ties with Turkic republics and neighboring regions. As Turkish Airlines continues to expand its global network, its maintenance subsidiary is increasingly positioned as a trusted partner for carriers seeking world-class technical support—bolstering Türkiye’s reputation as a center of excellence in the aviation sector.

Baghdad-KRG Breakthrough

The resumption follows a significant agreement between Iraq's federal government and the Kurdistan Regional Government to reactivate the critical export corridor, which has remained dormant due to longstanding disputes over revenue sharing and export rights. The KRG announced Tuesday that understandings had been reached with Baghdad to restore oil flows through the region to Türkiye's Mediterranean terminal, supporting Iraq's overall export system at a critical moment for global energy markets.

Strategic Importance Amid Crisis

The reactivation of the northern route carries heightened significance as the Strait of Hormuz remains effectively closed following Iran's retaliatory actions against US-Israeli attacks that have killed approximately 1,300 Iranians since Feb. 28. Prior to the conflict, some 20 million barrels of oil daily transited the strategic waterway, and its disruption has sent global prices climbing. On Sunday, Iraq's Oil Ministry signaled readiness to resume northern exports amid disruptions to southern routes linked to the Hormuz crisis.

Türkiye's Role

Ceyhan port's renewed role as an outlet for Iraqi crude reinforces Türkiye's position as a vital energy corridor connecting regional producers to global markets. The development comes as Ankara continues advocating for regional stability and diversified energy routes, with the Ceyhan terminal offering an alternative to Gulf shipping lanes now compromised by ongoing hostilities. The resumption also promises economic benefits for all parties involved, providing much-needed revenue streams and strengthening energy cooperation between Ankara and Baghdad.

February saw budget revenues soar by 87.1 percent compared to the same month last year, reaching 1.14 trillion liras ($25.8 billion). This sharp rise was primarily fueled by tax revenues, which totaled 1.21 trillion liras ($27.38 billion) during the month. Meanwhile, budget expenditures increased at a more moderate pace of 28.6 percent year-on-year, amounting to 1.32 trillion liras ($29.87 billion). The expenditure figure includes interest payments totaling 183.69 billion liras ($4.15 billion).

Primary surplus highlights fiscal discipline

When excluding interest payments, Türkiye's budget performance appears even stronger, with the primary balance showing a surplus of 208.1 billion liras ($4.7 billion) in February. This metric, which measures the government's fiscal stance without the cost of past borrowing, indicates solid underlying budget discipline. The February surplus follows a challenging start to the year, with the January-February period overall recording a deficit of 190.17 billion liras ($4.3 billion).

Year-to-date deficit narrows

The February surplus has helped contain the cumulative deficit for the first two months of 2025. The Treasury and Finance Ministry's data reflects ongoing efforts to strengthen public finances while managing expenditure growth. The revenue surge, particularly in tax collection, demonstrates improved compliance and economic activity as Türkiye continues to implement its medium-term economic program focused on price stability and fiscal consolidation.

In a video statement, Deputy Prime Minister for Energy Affairs and Oil Minister Hayyan Abdul Ghani outlined Iraq’s response to the disruption of its primary export channel. He explained that prior to the current conflict, Iraq shipped approximately 3.4 million barrels per day, predominantly through southern terminals such as Basra. However, military escalation in the Gulf and Iran’s decision to restrict passage through the Strait of Hormuz have forced a dramatic reduction in output. “Oil production has now been reduced to 1.5–1.6 million barrels per day to meet the needs of refineries and power plants,” Abdul Ghani stated, noting that facilities are operating at maximum capacity to produce gasoline, diesel, and LPG while maintaining emergency reserves.

Technical details and timeline

The minister confirmed that the Iraq-Türkiye pipeline, which transports crude from Kirkuk fields to the Ceyhan port, has a capacity of 200,000 to 250,000 barrels per day. Final testing and maintenance are currently underway, with hydrostatic tests on a 100-kilometer section expected to conclude within a week. “Oil will be fed directly from the Kirkuk fields into the pipeline and can be sent to Türkiye without passing through the KRG,” Abdul Ghani emphasized, highlighting the operational independence from regional authorities. Baghdad is also exploring additional export routes, including shipments via Syria’s Baniyas Port and the Aqaba pipeline corridor, as part of a broader strategy to diversify outlets.

Direct flow bypassing KRG

The reactivation of the Kirkuk-Ceyhan line represents a critical alternative for Iraq, which remains bound by its OPEC production quota of approximately 4.4 million barrels per day. With southern exports paralyzed, the pipeline through Türkiye offers a viable pathway to resume international sales and stabilize domestic energy supplies. The development underscores Ankara’s role as a key energy corridor for regional producers navigating heightened tensions in the Gulf. As testing enters its final phase, all eyes are on the pipeline’s readiness to deliver Kirkuk crude to global markets via Ceyhan.

Strategic Trade Corridor

Speaking at an Ankara iftar gathering, Uraloglu emphasized that the initiative will establish a significant production and logistics hub, strengthening Türkiye's role as a vital link between Asian and European markets. The new route is designed to integrate seamlessly with the existing Middle Corridor, substantially reducing rail transit times between the two continents. Once fully operational, the network will further enhance Türkiye's geographic advantage as a central node connecting approximately 67 countries within a four-hour flight radius, with planned linkages to ports on the Black Sea, Aegean Sea, and Mediterranean Sea.

Zangezur and Regional Connectivity

The minister also provided updates on related infrastructure developments, confirming that construction has officially commenced on the Zangezur Corridor, with 224 kilometers currently being developed by a domestic Turkish firm. While Azerbaijan has completed substantial portions on its territory, active construction continues on the Turkish side. Upon completion within an estimated five-year timeframe, the corridor will establish a direct gateway to Turkic nations and Asia-Pacific markets, further expanding Ankara's regional economic influence. Additionally, Uraloglu noted that active negotiations are underway between Türkiye and Syria regarding reconstruction of damaged sections of the historic Hejaz railway connecting Damascus to Jordan.

Hormuz Situation and Regional Disruptions

Addressing current regional challenges, Uraloglu reported that approximately 14 Turkish commercial vessels remain stranded outside the Strait of Hormuz amid escalating military conflict, with only one ship securing passage after utilizing an Iranian port. The remaining Turkish fleet waits alongside some 800 other international vessels. Türkiye has suspended or rerouted commercial flights across the region, with two aircraft belonging to Turkish Airlines and Pegasus grounded in Iran and a third stuck in Iraq. All flight crews have been successfully evacuated, though aircraft retrieval negotiations continue.

Digital Transformation and 5G Launch

In technology developments, Uraloglu revealed that the government has submitted a parliamentary proposal to restrict social media access for users under 15, modeled on similar measures being tested in the United States, France, and Australia. On the telecommunications front, Türkiye's domestically produced Turksat 6A satellite now serves approximately 5.5 billion people across eight nations, with a projected 25-year operational lifespan. Development of the next-generation Turksat 7A system has already begun. The minister confirmed that Türkiye's national 5G network will transmit its inaugural signal on April 1, with some 32 million of the country's 95 million active mobile phones already 5G-compatible—more than doubling from 15 million last year. The nationwide transition expected within two years will revolutionize remote medical procedures, automated construction, and smart city management capabilities.

According to the bank's statement, "the underlying trend of inflation was essentially flat in February," providing justification for the steady rate. However, policymakers acknowledged mounting external pressures, noting that "as uncertainty heightened amid geopolitical developments, global risk appetite deteriorated and energy prices increased." The assessment reflects growing concerns about spillover effects from the ongoing US-Israeli military campaign against Iran, which has disrupted energy markets and threatened broader regional stability since Feb. 28.

Coordinated policy approach

The central bank emphasized that decisions supporting tight monetary policy have been implemented alongside coordinated fiscal measures designed to contain risks to the inflation outlook. This integrated approach aims to address both monetary and fiscal dimensions of price stability, recognizing that external shocks require comprehensive policy responses. The statement underlined that the tight monetary policy stance will strengthen the disinflation process through multiple transmission mechanisms, including demand management, exchange rate stability, and inflation expectation anchoring.

Gradual policy normalization continues

Thursday's decision represents a continuation of the gradual policy normalization path that began in 2025. Starting from 45%, the central bank progressively reduced rates throughout the last year, reaching 38% before the final decrease to 37% at the first monetary policy meeting of 2026. The current pause reflects policymakers' assessment that maintaining the existing rate provides appropriate support for disinflation while allowing time to evaluate the impact of geopolitical developments on domestic economic conditions. As Türkiye navigates complex regional dynamics, including its role in NATO and relationships with conflict-affected neighbors, the central bank's cautious stance demonstrates commitment to price stability amid extraordinary external challenges.

Türkiye's Strategic Inclusion

Following months of negotiations, the draft legislation explicitly recognizes Türkiye's Customs Union agreement with the EU, classifying Turkish-made goods as having EU origin when competing for European public contracts and state subsidies. Trade Minister Ömer Bolat hailed the development as a critical milestone in bilateral trade relations, noting that inclusion means Türkiye's vital automotive and steel sectors will not be excluded from their largest export market. Türkiye's geographical proximity, advanced production infrastructure, and skilled workforce position it as a prime manufacturing and supply hub for the bloc.

Sectoral Implications

The proposal mandates that electric vehicles procured through public funds must be assembled within the EU six months after enactment, with 70% of components—excluding batteries—originating in Europe. Strategic sectors face graduated requirements: 25% of aluminum and steel used in public procurement must be European-produced and low-carbon. For renewable energy, basic solar panel components must be manufactured in Europe within three years. Foreign investments exceeding €100 million in sectors where third countries control over 40% of global production face strict scrutiny.

EU Internal Debate

The initiative has sparked debate among member states, with France advocating for narrow scope while Germany warns that stringent local production requirements could deter investment and weaken global competitiveness. Berlin has proposed a "Made with Europe" alternative emphasizing partnership with trading partners. The proposal will undergo further negotiations in the European Parliament, where Türkiye's inclusion under the Customs Union framework appears solidified regardless of the final text's evolution.

Customs Union Framework Secures Inclusion

EU Commission Vice President Stephane Sejourne confirmed that countries with existing trade agreements, including the Customs Union with Türkiye, will be covered under the scheme . Turkish Trade Minister Omer Bolat welcomed the development, stating that confirming the legal basis for Türkiye's inclusion marks a critical step in bilateral trade relations and will protect Turkish competitiveness from potential new customs duties .

Automotive Sector Gains Strategic Advantage

Baran Celik, chair of the Uludag Automotive Industry Exporters' Association, noted that the move elevates Türkiye from a production center to a comprehensive ecosystem partner. "Türkiye's inclusion will also ensure the uninterrupted flow of our exports to the EU and strengthen our position in the EU's strategy to reduce its dependence on China," Celik said, adding that domestic suppliers will directly benefit from EU green transformation funds and R&D incentives . The automotive sector, which exported $40 billion annually with more than 60% destined for EU markets, faces new obligations requiring close monitoring as the EU demands stricter reciprocity .

Steel Industry Eyes Green Transformation

Veysel Yayan, secretary general of the Turkish Steel Producers' Association, emphasized that Turkish steel already operates in line with EU production standards and technical regulations. "This classification could create an opportunity for Turkish steel when we look at the market gaps that may arise if other exporters are not included," Yayan stated . With green transformation not yet required under the current proposal, Turkish steel may accelerate decarbonization investments to deepen alignment with Europe's climate policies. Türkiye's geographical proximity and robust production capacity position the sector as a reliable and competitive supplier for European industry.

Export Growth and Key Markets

Ismail Yilmaz, chair of the Ornamental Plants and Products Exporters' Association, told Anadolu that this year's activity surpassed 2025 levels with a 15% increase in orders. "Last year, we exported $9 million worth of flowers for International Women's Day, and this year we made a turnover of around $12 million," he stated. The Netherlands remains Türkiye's most significant market, followed by the United Kingdom, with additional shipments reaching Germany, Romania, Bulgaria, and despite ongoing conflict, Ukraine and Russia.

Sector Employment and Production

Yilmaz noted that European buyers favored pastel-colored flowers this year, alongside significant orders for red and white varieties. The sector utilizes approximately 15,000 acres of cultivated land and provides direct employment for 100,000 workers, with an additional 300,000 employed indirectly. Women constitute 80% of the Turkish flower sector's workforce, underscoring the industry's role in female employment as Türkiye celebrates International Women's Day through this vibrant export achievement.

Simulator Development and Export Milestone

Turkish defense firm Havelsan will supply the full mission and flight training simulators accompanying the Hürjet, with delivery to the Turkish Air Force scheduled for the fourth quarter of 2026 ahead of the Spanish export. Havelsan General Manager Mehmet Akif Nacar described the agreement as a major turning point, noting it reverses a long-standing trend where Türkiye imported such simulators. "Havelsan has now developed the capacity to design and export comprehensive simulator software," Nacar stated, adding that the company plans to apply the same model with other Hürjet purchasing nations.

Technical Capabilities and Future Prospects

The Hürjet's next-generation embedded simulator enables pilots to train in virtual scenarios during actual flights, extending operational training time without relying on ground-based systems. Havelsan engineers contributed to the aircraft's engineering tests and cockpit validation over three years, applying the same approach to Türkiye's KAAN combat aircraft program. The company is constructing a new complex in Ankara expected to become Europe's largest simulator production and integration center. The Hürjet is scheduled to enter service in Türkiye in 2027 and in Spain in 2028, with Nacar projecting growth in Havelsan's global market share as TAI expands international sales of platforms including Hürkuş and Atak aircraft.

Albayrak Group stands out as a strong player on a global scale with its activities in the maritime and port infrastructure sector. Albayrak İnşaat, operating under the Group, develops infrastructure for strategic ports in different geographies with its extensive fleet consisting of dredgers, barges, tankers, and sheet piling platforms. Operations actively utilize two TSHD dredgers with capacities of 4,000 and 3,000 cubic meters, dredging barges working in narrow and shallow areas, petroleum product tankers providing in-port refueling, and sheet piling platforms used in the construction of quays and jetties. This fleet structure enables uninterrupted and highly efficient operations in both large-scale dredging projects and sensitive in-port works.

Integrated Maritime Operations at Strategic Ports

The dredging and port development works carried out at the ports within the group's portfolio, notably including Trabzonport, Alport Conakry, Alport Banjul, Alport Mogadishu, and Alport Pointe-Noire, demonstrate Albayrak Group's engineering strength and operational competence in the maritime field, encompassing a total of 5 million m³ of dredging activity. By working with its own in-house fleet and equipment, the Group ensures full control and rapid mobilization advantages in its operations, distinguishing it from its competitors in the sector.

Safe navigation depths in port basins are restored through hydrographic surveys conducted by specialist engineering teams and environmentally sensitive dredging activities. While these works enable larger vessels to dock at the ports, they also significantly increase handling capacity and operational efficiency. The high-capacity dredgers, dredging barges operating in narrow and shallow areas, petroleum product tankers, and sheet piling platforms within the Albayrak Group fleet provide integrated services across a wide spectrum, from seabed dredging to quay construction, from fuel supply to new port investments. Conducted in accordance with international maritime standards, these activities make a strong contribution to the sustainability of regional trade.

Syrian Market Surge and Regional Competition

Çakmak highlighted remarkable export growth in neighboring Syria, where monthly shipments surged from 18,000 tons in 2025 to between 55,000-65,000 tons currently. Türkiye's established brand equity provides significant advantage against regional competitors, particularly Egypt, enabling sustained market share expansion even amid challenging conditions. The sector's performance underscores Turkish agricultural processing capabilities and logistical advantages serving Middle Eastern and African markets.

Domestic Outlook and Nutritional Transformation

Optimism for domestic wheat production is rising, with the federation projecting total harvest exceeding 20 million tons this year, buoyed by favorable January rainfall. Looking ahead, the sector faces significant transformation in 2026 as the government prepares regulations mandating 40% whole wheat content in commercial bread production—a measure designed to boost national nutritional standards. The shift will require industry adaptation while potentially opening new product categories and health-focused market segments.

Policy Mix and Inflation Outlook

The IMF emphasized that the current policy mix "continues to balance disinflation with steady growth," with tight monetary policy, moderate wage growth, and broadly neutral fiscal policy expected to support gradual price stabilization. End-2026 inflation is projected at 23%, while growth is expected to reach 4.2% as policy rate cuts and rising confidence stimulate domestic demand. The current account deficit remains adequately financed, and reserves are projected to stay near 80% of the IMF's adequacy metric, supported by depositor confidence and strong gold prices.

Risks and Reform Imperatives

While acknowledging progress, the IMF cautioned that external risks remain elevated due to persistent global trade uncertainty and regional conflicts. Energy price shocks or adverse weather events could prolong the disinflation period. The gradual approach has also weighed on the financial sector and slowed productivity growth. Executive directors commended authorities for fiscal efforts while urging continued tightening, tax base broadening, improved compliance, and streamlining expenditures through phasing out energy subsidies. Structural reform priorities include improvements in labor markets, education, governance, SME support, and increasing renewables in the energy mix.

Long-Term Projections and Financial Stability

IMF projections indicate 4% average annual growth through 2031, with inflation declining to 19% in 2027 and 15% thereafter. Unemployment is forecast at 8.3% in 2026, rising gradually to 9.1% through 2031. The financial sector remains robust following swift responses to market stress, though directors emphasized the need for a simplified monetary policy framework centered on the policy rate with enhanced central bank independence. Continued vigilance on FX liquidity risks and strengthened oversight of crypto assets were also highlighted as priorities.

The forum, which brought together commercial delegations from across Africa with Türkiye’s leading manufacturers and exporters, served as a platform to deepen economic partnerships and chart a shared roadmap for the future.

On the closing day, participants reflected on key outcomes, including a surge in bilateral trade, new defense industry agreements, and a shared commitment to sustainable cooperation beyond traditional aid models.

TRADE VOLUME NEARLY SEVEN TIMES HIGHER SINCE 2003

Speaking at the forum, Deputy Minister of Trade Mahmut Gürcan underscored the concrete results of Türkiye’s multi-dimensional engagement with Africa. He noted that trade volume between Türkiye and Africa, which stood at $5.4 billion in 2003, had reached approximately $40 billion by 2025—a nearly sevenfold increase.

“In 2025 alone, bilateral trade volume with African countries increased by 9 percent compared to the previous year,” Gürcan said.

He emphasized that Türkiye is no longer only a recipient of investment but an active investor abroad, deepening economic ties through strategic projects.

“Given the uncertainty and unpredictability in the global economy, we believe it is essential to diversify and deepen the existing technological links between Türkiye and Africa. This will allow us to positively transform our bilateral relations and unlock new opportunities for collaboration.”

Gürcan also stressed the need for an updated roadmap in response to Africa’s growing global significance. “As a ministry, we will proceed with a strategy aimed at advancing trade and economic relations with African countries through a refined vision in the 2025 period. Within this framework, Türkiye is positioned to become a key trade partner of the African Continental Free Trade Area.”

DEFENSE COOPERATION TAKES CENTER STAGE

Deputy Minister of National Defense Salih Ayhan highlighted the expanding role of Türkiye’s defense industry in Africa, moving beyond traditional supplier relationships toward strategic partnership.

“Our Bayraktar TB2 UAVs, ATAK helicopters, and high-tech defense systems are now becoming guarantees of peace across a vast geography—from Somalia to Nigeria, from Libya to Senegal,” Ayhan stated.

“The Türkiye model we present today is not merely about product sales. It is built on comprehensive training support, local capacity building, and most importantly, technology transfer. We see Africa, with its young population and immense potential, as one of the world’s rising stars.”

‘STRATEGIC AND INCLUSIVE COOPERATION IS NEEDED’

Dr. Ismaila Ceesay, Gambia’s Minister of Information, Media and Broadcasting Services, stressed that in an era of digital transformation, geopolitical fragmentation, and climate crisis, no nation can grow in isolation.

“We need a cooperation model that is intentional, strategic, and inclusive—one that fosters shared values, technology transfer, capacity development, and equitable partnerships. For Gambia, cooperation is not just a slogan; it is a national strategy.”

Ceesay pointed to the $66 million trade volume between Türkiye and Gambia in 2025 as a strong foundation, but noted significant potential for growth through increased exports, greater Turkish investment, upgraded port and logistics infrastructure, and deeper ties in vocational training and value-added production.

Gambia’s Minister of Youth and Sports, Bakary Badjie, reinforced the continent’s readiness to engage.

“Africa continues to be one of the world’s fastest-growing economies, with a vast population and an expanding market. On behalf of my government and ministry, I say this: Africa is ready—and Gambia is ready to welcome you.”

FORUM WRAPS WITH B2B MEETINGS AND EXHIBITIONS

The final day of the forum featured intensive B2B meetings, sponsor company presentations, and exhibition booths, offering concrete leads for future collaboration.

Organizers noted high levels of participation and optimism, with many delegates describing this year’s forum as a turning point in Türkiye-Africa economic relations.

The 14th WCI Forum officially closes this evening in İstanbul.

Resilience Amid Regional Challenges

Yağcı, head of the Turkish tourism non-profit Turofed, highlighted the industry's resilience despite significant geopolitical tensions in the surrounding region. "The Turkish tourism sector is a crisis-resistant business," he stated, expressing optimism that 2026 will see results slightly above the 2025 records. The achievement underscores the sector's strategic importance to the national economy.

Strategy for Year-Round and Event Tourism

A key strategic focus is extending the tourism season beyond the summer months and dispersing visitors across the country. Efforts are intensifying in niche areas like sports, conference, and winter tourism. The Mediterranean resort city of Antalya, ranked among the world's top ten tourist cities, is central to this strategy, hosting major events including the Antalya Diplomacy Forum, the International Astronautical Congress, and the UN's COP31 climate conference in 2026.

Future Outlook and Global Standing

The sector's goal is to maintain growth by leveraging Türkiye's diverse cultural, historical, and geographical offerings. The hosting of high-profile international events is seen as a catalyst for attracting visitors during off-peak seasons and enhancing the country's profile as a global hub for diplomacy and business. This approach aims to ensure sustainable growth and further cement Türkiye's status as a leading tourism powerhouse.

Trade Agreements and Services Exports as a Shield

Simsek noted that about 62% of Türkiye's exports benefit from preferential access through the EU Customs Union and free trade agreements with 27 countries, offering partial protection against global trade fragmentation. He emphasized the strength of the services sector, where Türkiye ranks among the world's top 20 and is a global leader in tourism, construction, and media exports. "Services have so far been less affected by protectionism than goods," Simsek stated, highlighting the sector's high value and job creation potential.

Strategic Investments in AI, Energy, and Connectivity

Looking forward, the minister outlined strategic priorities, including significant investment in artificial intelligence, human capital development, and education. He also underscored Türkiye's critical geographical position, describing work on new trade routes linking the Gulf to global markets via the nation's infrastructure. Energy security is a parallel focus, with plans to build two or three additional nuclear power plants in the coming decades to meet rising demand, partly driven by AI expansion.

Positioning on the Middle Corridor

Simsek framed connectivity as central to Türkiye's economic strategy, positioning the country as a key hub on the transcontinental Middle Corridor from Beijing to London. This focus on regional integration and building new trade corridors aims to solidify Türkiye's role as a logistical and energy bridge, enhancing its economic resilience amid a complex global landscape.

Weekly Increase and Composition of Reserves

Reserves increased by $2.54 billion, or 1.2%, in the week ending January 30, climbing from the previous week's $215.6 billion. A notable shift occurred within the reserve composition: while foreign currency reserves in convertible currencies saw a slight decline of 2.4% to $76.6 billion, the bank's gold reserves experienced a substantial 3.4% jump, reaching $133.8 billion.

Strategic Importance of Gold Holdings

The continued expansion of gold reserves, which include physical gold and gold swap arrangements, has been a cornerstone of the central bank's strategy to bolster financial stability. The rise in gold holdings highlights a deliberate diversification effort aimed at strengthening the country's economic resilience and safeguarding against global financial volatility.

Context of Economic Policy and Investor Confidence

This consistent accumulation of reserves reflects the broader impact of Türkiye's recent economic policy framework, which prioritizes price stability and rebuilding foreign exchange buffers. The record level serves as a key indicator of growing market confidence and the central bank's capacity to manage external shocks, providing a more robust foundation for the national economy.

A Sustained Disinflation Trend

The January figure represents the lowest annual inflation reading in the country since November 2021. The official statistics indicate the disinflation process has been largely consistent over the past twenty months, with only a single interruption. On a monthly basis, consumer prices rose by 4.84% in January.

Sectoral Price Dynamics

A breakdown of the data reveals significant variation across different sectors. Education costs recorded the highest annual increase at 64.7%, followed by housing at 45.36%, and hotels, cafes, and restaurants at 33.31%. Conversely, clothing and footwear saw the most modest price rise at 7.07%, with communications and health costs also below the general average.

Government Commentary and Policy Stance

Commenting on the data, Treasury and Finance Minister Mehmet Şimşek noted on social media platform Nsosyal that food prices and seasonal factors influenced the monthly inflation figure. He expressed confidence that January-specific impacts would have a limited effect on the underlying disinflation trend. Minister Şimşek emphasized the government's unwavering commitment to continuing its disinflation policies, which are supported by targeted supply-side measures.

Profile of the Appointees

One of the new deputies, Fatma Ozkul, moves into the role from her previous position as a member of the bank's critical Monetary Policy Committee (MPC), bringing direct experience in the institution's recent decision-making processes. She is joined by Gazi Ishak Kara, whose appointment adds a new member to the bank's executive leadership.

Formal Procedure and Context

The announcement was made through the official state publication, the Official Gazette, which records all major government decrees and legal notifications. Such high-level appointments to the central bank are made directly by the President of Türkiye, underscoring the strategic importance of the institution in managing the country's monetary policy and financial stability.

Institutional Significance

The Central Bank of the Republic of Türkiye is the primary authority responsible for implementing monetary and exchange rate policy, with the goal of achieving and maintaining price stability. Changes to its deputy governor roster are closely watched by financial markets for signals regarding the direction of future economic policy.

Focus on Private Sector and Earthquake Recovery

Approximately 90% of the 2025 investment, amounting to nearly €2.5 billion, was channeled to private companies. Falcetti highlighted the dynamism of Turkish businesses, including SMEs, which have "learned how to manage a time of crisis." A significant portion of the bank's activities also centered on its earthquake response package for regions affected by the 2023 disaster. The bank has now surpassed its initial €1.5 billion pledge for reconstruction, funding critical municipal infrastructure projects in cities like Hatay and Adiyaman.

Strategic Programs for Youth, Women, and Green Transition

The EBRD launched several strategic financing facilities in Türkiye during the period. This includes the new €250 million "Youth in Business" program and the ongoing "Women in Business" initiative. For the green transition, the bank activated a third round of its €1 billion Green Economy Financing Facility (GEFF). Furthermore, the EBRD has committed up to $5 billion through 2030 for the Türkiye Industrial Decarbonization Investment Platform, targeting heavy industries like cement and steel.

Economic Outlook and Continued Commitment

Falcetti expressed optimism about Türkiye's economic prospects, forecasting growth of around 3.5% for 2026. She praised the country's economic management for focusing on disinflation and creating a more predictable business environment. With cumulative investments exceeding €23 billion since 2009 and an active portfolio of €8 billion, the EBRD plans to exceed last year's record investment level in the coming year, underscoring its long-term commitment to Türkiye's development, regional connectivity, and stability.

Weekly Surge in Reserves

Total reserves increased by 5.1%, or $10.44 billion, from the previous week's total of $205.18 billion. This follows the milestone achieved just a week prior, when the bank's reserves crossed the $200 billion threshold for the first time. The consistent growth highlights a positive trend in Türkiye's macroeconomic management and its capacity to meet external financial obligations.

Breakdown Shows Strong Gold Accumulation

A detailed breakdown reveals that foreign currency reserves rose by 2.7% to $78.5 billion. The most substantial increase was seen in gold reserves, which jumped by 6.9% to reach $129.4 billion. This category includes physical gold holdings as well as gold deposits and swaps. Additionally, reserve positions at the International Monetary Fund (IMF) and Special Drawing Rights saw a marginal increase of 0.2%, totaling $7.7 billion.

Economic Implications and Context

The record level of reserves is a key indicator of economic resilience and provides the central bank with greater flexibility in monetary policy and currency market operations. For Türkiye, a nation navigating complex global economic currents, maintaining robust reserves is crucial for financial stability, investor confidence, and shielding the economy from external shocks. The data reflects the ongoing implementation of the country's economic policy framework.

Key Figures on Unemployment and Employment

The data shows the number of unemployed people aged 15 and over declined by 286,000 month-on-month to stand at 2.73 million. A gender breakdown reveals a disparity, with male unemployment at 6.3% and female unemployment at 10.5%. Conversely, total employment saw a marginal decrease of 42,000 people, bringing the number of employed individuals to 32.68 million. The overall employment rate settled at 49.1%.

Labor Force Dynamics and Youth Unemployment

The size of the labor force also contracted, decreasing by 328,000 to 35.42 million, which resulted in a labor force participation rate of 53.2%. A positive development was observed in youth unemployment (ages 15-24), which fell by 1.1 percentage points to 14.1%. However, a significant gender gap persisted in this category as well, with rates of 12% for young men and 18.2% for young women.

Annual Perspective and Economic Context

For the full year of 2025, the average unemployment rate in Türkiye was approximately 8.3%. The record low monthly figure underscores the resilience of the Turkish labor market amidst global economic challenges. As Türkiye continues to implement its economic policies, monitoring these employment trends remains crucial for assessing overall economic health and social stability.

A new phase in bilateral trade dynamics

The significant increase in commerce follows extensive diplomatic and business talks between the two nations. According to Mahsum Altunkaya, chair of the DEIK Türkiye–Syria Business Council, the shift in Syria and an easing of global sanctions created fresh momentum. “Türkiye is one of the key and constructive advocates for Syria’s reconstruction and development,” Altunkaya stated, noting the trade environment is becoming "more predictable, secure, and sustainable."

Key export sectors and border activity

The export boom was led by essential goods, with the cereals, pulses, and oilseeds sector accounting for approximately $700 million of the total, growing over 35%. Significant double-digit growth was also seen in chemicals, machinery, textiles, and metals. The reopening and increased activity at eight land border crossings facilitated this exchange, with 2.3 million passenger crossings recorded in 2025, 1.35 million of whom departed from Türkiye.

Linking trade growth to regional stability and returns

Business leaders directly connect the commercial revival to improved security, which they believe will encourage the voluntary return of Syrian refugees. Altunkaya cited Turkish Interior Ministry data showing 600,000 returns between December 2024 and 2025. “As peace is made in the region and people find food and employment, Syrian guests in Türkiye will be more eager to return,” he said, advocating for a “win-win model” where Turkish investment actively contributes to Syria's development as a "center of peace and prosperity."

Expanded Route Network and Connectivity

Under the agreement announced Monday, Turkish Airlines will place its "TK" code on Air Montenegro flights operating between Istanbul and the Montenegrin cities of Tivat and Podgorica. Conversely, Air Montenegro will add its "4O" code to select Turkish Airlines services connecting the two countries, as well as on Turkish Airlines flights from Istanbul to Baku, Azerbaijan, and Dubai, United Arab Emirates.

Strategic Benefits and Executive Commentary

Turkish Airlines CEO Bilal Eksi highlighted Istanbul's role as a global aviation hub and a strategic bridge between continents, stating the partnership will add momentum to bilateral air traffic while supporting tourism and trade. Air Montenegro CEO Vukadin Stojanovic described the deal as a key step in strengthening Montenegro's international access, allowing the airline to leverage Turkish Airlines' extensive global network and offer passengers a wider range of destinations with an improved travel experience.

Expected Impact on Tourism and Trade

The codeshare pact is anticipated to facilitate the growth of tourism and commercial exchange between Türkiye and Montenegro. Passengers from both nations will benefit from more flexible travel options and streamlined connections via Istanbul, which hosts one of Europe's most comprehensive flight networks operated by Turkish Airlines.

Key Drivers: Reserves and Reduced Vulnerabilities

The international credit rating agency announced the decision on Friday, attributing it to "a further reduction in external vulnerabilities." Fitch highlighted a faster-than-anticipated accumulation of gross foreign exchange reserves, which reached $205 billion in mid-January, up from $155 billion at the end of 2024. Crucially, net reserves excluding swaps recovered to a positive $78 billion from a deficit of $66 billion in March 2024. The agency also noted improved reserve quality and a decline in foreign-currency contingent liabilities.

Supportive Policies and External Financing

Fitch pointed to continued tight macroeconomic policies as a supportive factor for the improved metrics. The country's external financing position is also strengthening, with external liquidity projected to rise to nearly 100% by 2027 from 80% at the end of 2024. This projection is supported by Türkiye's sustained access to external financing and a resilient banking sector, according to the agency.

Underlying Strengths and Future Path

The ratings affirmation at BB- continues to be supported by Türkiye's large, diversified economy and its low level of government debt. The Positive outlook indicates that if current trends in reducing macroeconomic imbalances and building buffers continue, an upgrade to the sovereign credit rating could follow in the future.

A Consolidated Position of Global Leadership

IOC Executive Director Jaime Lillo stated that data from the last five seasons confirm Türkiye's consolidated position behind Spain in olive oil output and ahead of Egypt in table olive production. "Türkiye is now an indispensable country for the olive sector," Lillo said, highlighting its contribution to both global health and the environment through expanding groves. He noted Türkiye's "extraordinary season in 2024–25" and its massive 132% increase in olive oil exports that helped drive a 25% rise in global trade.

Addressing Climate Change and Sector Growth

Lillo identified climate change as a major reality impacting production volatility, citing unprecedented consecutive short harvests that recently drove price spikes. The IOC is working on adaptation strategies, including utilizing olive trees as carbon sinks. He also noted a post-pandemic surge in global olive oil consumption, expanding into new markets like the US, China, and Japan. "This is the best time ever to enjoy oils of excellent quality," he remarked, pointing to improved quality and volume.

Türkiye's Role and Sector Outlook

Türkiye's influence within the IOC has grown, with active representation since 2023. The council also recognizes the importance of genetic collections in Türkiye, such as in Izmir. Looking ahead, global olive oil production for 2025-26 is estimated at 3.44 million tons, with Türkiye's output expected to decline from its peak but remain substantial. The IOC continues its scientific advocacy, citing studies that show olive oil reduces risks of heart disease, breast cancer, and Alzheimer's.

A Data-Driven Approach to Inflation Targeting

Policy decisions will be based on comprehensive analyses of price dynamics, inflation forecasts, demand conditions, and financial stability indicators. To enhance transparency and accountability, the bank will publish quarterly inflation reports featuring year-end interim targets. These interim goals are set at 24% for 2025, 16% for 2026, and 9% for 2027, with a commitment to provide a detailed assessment if actual year-end inflation deviates significantly from these projections.

Commitment to Monetary Tightening and Market Reforms

The bank affirmed it will sustain a tight monetary policy until price stability is durably achieved, utilizing the policy rate to influence demand, exchange rate expectations, and overall inflation trends. It warned that further policy tightening would be implemented if the inflation outlook deteriorates. Concurrently, efforts to strengthen the monetary transmission mechanism will continue, ensuring market interest rates align with the policy rate. Additional macroprudential measures may be introduced if credit growth exceeds desired levels.

Reserve Management and Exchange Rate Regime

A key component of the program is the intention to increase international reserves, managed with priorities of safety, liquidity, and return. The bank reaffirmed its commitment to a free-floating exchange rate regime, stating it has no predetermined exchange rate target and will not intervene to set a level for the Turkish Lira. However, it retains the right to take necessary measures to ensure the smooth functioning of foreign exchange markets, underscoring a balanced approach between market freedom and financial stability.

Foreign direct investment (FDI) into Türkiye reached $12.4 billion from January to November 2025, according to data released by the International Investors Association (YASED). The figure represents a substantial 28% increase compared to the same period in the previous year, signaling robust international confidence in the country's economic landscape.

Breakdown of November inflows

The month of November alone contributed $990 million to the cumulative total. A detailed breakdown shows that $342 million entered as new equity investment capital, while $514 million came in the form of debt instruments from foreign parent companies to their Turkish subsidiaries. An additional $218 million was generated from real estate purchases by foreign nationals, offset by $84 million in investment liquidations.

Long-term investment trends and composition

Since 2003, the total stock of foreign direct investment in Türkiye has surpassed $286 billion. Analyzing the first eleven months of 2025, equity capital inflows constituted the largest component at $8.9 billion. Debt instrument inflows totaled $3 billion, and real estate sales to foreigners accounted for $2.1 billion. These positive flows were partially offset by $1.5 billion in divestments or liquidations, resulting in the net $12.4 billion figure.

Significance for the Turkish economy

The sustained inflow of foreign capital is a critical indicator of economic health and external confidence, supporting the Turkish Lira, job creation, and technology transfer. For a strategically located nation like Türkiye, which bridges Europe and Asia, maintaining strong FDI is essential for financing its current account deficit and fostering long-term industrial growth amid global economic uncertainties.

Turkish defense contractor Aselsan has reached a historic financial milestone, surpassing $30 billion in market capitalization. This achievement makes it the first Turkish company to cross that threshold and secures its position among the top ten most valuable defense firms in Europe, marking a significant moment for Türkiye's strategic industries.

Export-driven growth and major contracts

The company's remarkable valuation is underpinned by aggressive international expansion and a focus on high-technology products. A key driver was a recent $410 million contract with NATO member Poland, strengthening Aselsan's footprint in the European defense market. From the start of 2023, the firm's order backlog has skyrocketed by 120% to reach $17.9 billion, a growth rate that nearly triples the global industry average.

Soaring exports and investor confidence

Aselsan's performance in international markets has been equally impressive. In the first nine months of 2025, the company signed new export contracts worth $1.45 billion, representing a staggering 171% increase compared to the same period the previous year. This export-oriented strategy, combined with its advanced technological solutions, has made the Ankara-headquartered company a focal point for global investors seeking exposure to Türkiye's tech transformation.

A symbol of national industrial capability

Aselsan's rise reflects the growing depth and competitiveness of Türkiye's domestic defense industry, which has prioritized self-sufficiency and innovation. The company stands as a leading indicator of the country's broader economic and technological ambitions, reducing reliance on foreign military imports and establishing itself as a formidable player on the global defense stage. Its success is closely watched as a benchmark for other strategic sectors within the Turkish economy.

Passenger Advisory and Operational Response

The airline advised affected passengers to monitor their flight status via its official website for updates and rebooking options. This proactive measure reflects the carrier's standard safety-first protocol to ensure passenger security amid volatile situations, demonstrating Türkiye's commitment to responsible aviation management.

Context of Iranian Protests

The flight cancellations coincide with sustained nationwide protests in Iran that began on December 28, initially sparked by a sharp currency devaluation and deteriorating economic conditions. While Iranian authorities have not released official casualty figures, the US-based Human Rights Activists News Agency (HRANA) reported 42 deaths, including eight security personnel, and over 2,200 arrests by the twelfth day of demonstrations.

Türkiye's Cautious Regional Stance

Turkish Airlines' operational decision highlights Türkiye's careful and pragmatic approach to regional instability. While maintaining diplomatic channels and expressing concern for the welfare of all Iranian people, including ethnic Turks in cities like Tabriz, Türkiye prioritizes the safety of its citizens and commercial interests, avoiding provocative statements and emphasizing stability along its borders.

Details of the New Agreements

The newly inked JETCO Action Plan outlines 16 specific measures designed to deepen bilateral cooperation across various sectors. Alongside this, a Mutual Recognition Agreement on Authorized Economic Operators was signed to facilitate smoother customs procedures. Minister Bolat stated these agreements are pivotal for developing a strategic partnership, adding that significant progress was made in talks to modernize the existing UK-Türkiye Free Trade Agreement, which has been in force since 2021.

Ambitious Trade Targets and Past Success

The two countries are aiming to elevate their annual trade volume to $30 billion in the short term and $40 billion in the medium term. This ambition is built on a strong foundation: bilateral trade has grown by over $5 billion in the past four years, reaching $24 billion, with an increase of $1.8 billion in the last year alone. Bolat emphasized the role of Türkiye's young workforce, strategic location, and comprehensive investment incentives in attracting UK investment.

Strategic Vision and Global Cooperation

Minister Bolat framed the partnership as a "win-win approach" based on mutual trust, expressing hope that the deep-rooted friendship would yield fruitful economic outcomes. He highlighted discussions on cooperation in third-country contracting projects and meetings with UK business leaders, underscoring Türkiye's proactive role in forging strategic economic alliances that bolster its position as a global production and trade hub independent of regional blocs.

Trading session details

The index opened at 11,741.47 points and climbed steadily throughout the day, reaching an intraday high of 12,032.36 points before settling slightly lower. The rally was broad-based, with 78 constituent stocks advancing and only 17 declining. The total market capitalization of the BIST 100 stood at approximately 11.89 trillion Turkish liras (about $276.8 billion), with a daily trading volume of 175.4 billion liras ($4.07 billion).

Context of recent economic momentum

This record-breaking performance follows a series of positive economic data releases, including declining inflation, robust export figures, and a significant drop in the country's credit default swap (CDS) premiums to seven-year lows. The convergence of these factors has bolstered investor sentiment, reducing perceived risk and attracting capital to Turkish assets. The BIST 100 had only recently set a record on Monday before surpassing it decisively the following day.

A signal of growing financial market confidence

For Türkiye, surpassing this psychological barrier represents more than a statistical milestone; it signals growing confidence in the nation's economic stabilization and reform trajectory. A strong and rising equity market can lower capital costs for businesses, support wealth creation, and enhance the country's appeal to international investors. While external currency and commodity risks persist, as reflected in the USD/TRY rate of 43.0430 and Brent crude at $61.35 per barrel, the stock market's breakout underscores a notable shift in domestic and foreign investor outlook toward Turkish financial markets.

Exports and current account balance

External trade performance has been one of the clearest pillars of this momentum. Exports surged 12.8% year-on-year in December to $26.4 billion, marking the highest monthly figure on record. In line with the Medium-Term Program, total exports for 2025 reached $273.4 billion, the highest level in the republic’s history. Supported by rising goods and services exports, the current account deficit remained manageable, while October posted a $457 million surplus. Excluding gold and energy, the surplus exceeded $7 billion, extending a positive trend for four straight months.

Disinflation gains traction

At the same time, the disinflation process continued to deepen. Annual consumer inflation eased to 30.89% in December 2025, the lowest reading in more than four years. Key components showed similar improvement, with services inflation falling below 44% and housing inflation dropping to its weakest level in nearly three years. Basic goods inflation declined to levels last seen five years ago, while clothing and footwear prices remained in single digits, highlighting a broad-based slowdown in price pressures.

Labor market and manufacturing signals

On the employment front, the unemployment rate stood at 8.6% in November, remaining in single digits for more than two and a half years. Manufacturing indicators also pointed to stabilization, as the Türkiye Manufacturing PMI rose for a second consecutive month in December, edging closer to the 50-point threshold that signals expansion and suggesting that operating conditions are no longer deteriorating sharply.

Markets and risk perception improve

Financial markets reflected these trends. Türkiye’s five-year CDS premium fell to nearly 204 basis points, its lowest level since 2018, easing external borrowing costs for both the public and private sectors. The BIST 100 index responded by setting a new record after four months, supported by declining risk premiums and stronger macroeconomic data. Together, these indicators are shaping a more confident outlook for Türkiye as it moves toward its 2026 economic targets.

In a statement on the social platform NSosyal, the flag carrier declared, "Türkiye is growing, Turkish Airlines is soaring." While the exact location was not specified, the projects are likely to be situated in Istanbul, home to the airline's major international hubs and Türkiye's commercial center.

Context of rapid fleet and network growth

The investment aligns with the airline's aggressive expansion strategy. CEO Bilal Eksi stated earlier this week that Turkish Airlines aims to rank among the world's top five carriers by 2033, with a planned fleet of 813 aircraft. As of the end of 2025, its fleet stands at 514 units, serving over 85 million passengers and transporting 2 million tons of cargo annually.

Enhancing Türkiye's role as a global aviation hub

This development underscores Türkiye's strategic intent to solidify Istanbul as a premier global transit and logistics nexus. By building unparalleled cargo and catering infrastructure, Turkish Airlines seeks to leverage its unique geographical position to capture a larger share of international air freight and passenger markets.

Annual inflation, which peaked around 65% in late 2022/2023 and ended 2024 at 44.4%, has shown a marked decline. The Consumer Price Index fell to 31.07% in November 2025, a four-year low. The official December figure will be announced on January 5, while the government's Medium-Term Program targets an average of 28.5% for 2025, falling to around 16% in 2026.

Monetary policy and growth targets

The Central Bank's Monetary Policy Committee, which cut its key rate to 38% in December, will hold eight meetings in 2026, starting January 22. The government targets economic growth of 3.8% for the year, following an estimated 3.3% expansion in 2025. Treasury and Finance Minister Mehmet Simsek cited tight policy and improved expectations as drivers for continued disinflation and sustainable growth.

Credit ratings and trade diplomacy in focus

Upcoming assessments by major credit rating agencies—Fitch and Moody's on January 23 and S&P in April—will be closely watched after recent upgrades. The government also plans an intensive schedule of international trade visits and negotiations to advance Free Trade Agreements, building on over 110 foreign contacts made by the Trade Ministry in 2025.

Haluk Gorgun, head of Türkiye's Defense Industries Directorate, stated Tuesday that the export is a key indicator of the nation's two-decade transformation in high technology and defense. He noted that Türkiye, under President Recep Tayyip Erdogan's leadership, has become a trusted producer that meets its own needs and shares technology with allies, achieving an 82-83% domestic production rate in its defense sector.

Comprehensive contract beyond aircraft

Speaking at Turkish Aerospace Industries (TAI) facilities in Ankara, Gorgun emphasized the deal's scope: "This agreement is not just a training aircraft agreement. It's a comprehensive contract encompassing many innovations, including ground systems, simulation systems, maintenance systems, and a cooperation model." The contract involved around 200 Turkish subcontractor companies and was finalized after extensive technical evaluations and air force consultations.

Gateway to third-country markets and mutual gains

The official highlighted that the agreement includes opportunities for mutual technological collaboration, integration of new subsystems, and the potential for jointly developing and exporting subsequent aircraft models to third countries. Gorgun underscored Türkiye's "win-win" approach, prioritizing mutual economic and technological gains with partner nations, which builds confidence and strengthens its position in the global defense market.

Bolat stated that talks with the UK are progressing positively, particularly in areas like digital trade and financial services. He also addressed efforts to modernize the decades-old Customs Union with the European Union, noting the European Commission's agreement to include services and e-commerce, though the process is stalled by opposition from a few EU member states in the Council.

Active trade diplomacy across multiple regions

The minister highlighted an intense year of trade diplomacy, with over 176 meetings held with counterparts from more than 100 nations. Türkiye is actively pursuing its "Africa and Far Countries" strategies, seeking preferential trade agreements within groups like the D8 (Developing 8) and preparing to host the Organization of Turkic States summit next year in Istanbul.

Addressing trade challenges with the US and Asia

Regarding the United States, Türkiye's second-largest trade partner, Bolat acknowledged the challenge of a "serious protectionist trade policy" under the Trump administration. He also pointed to a significant trade deficit with the Asia-Pacific region, against which Türkiye is actively employing trade defense measures such as anti-dumping investigations to protect its domestic market.

How the Gini coefficient is calculated

TurkStat said the index is based on household disposable income, calculated after deducting paid taxes and regular transfers from total annual earnings. The Gini scale ranges from zero, indicating full equality, to one, reflecting complete inequality, and Türkiye’s latest reading marked a 0.003-point improvement compared to the previous year.

Methodology update in 2025 data

With the 2025 results, the statistical authority introduced a revised approach by integrating administrative records. Under the new method, gross income data—after accounting for taxes and social security contributions—were converted into disposable income, aiming to improve accuracy and transparency in income measurement.

Shifts across income groups

The share of total disposable income held by the highest-income 20% slipped to 48%, down 0.1 points, while the lowest-income quintile saw its share rise to 6.4%, up 0.1 points year-on-year. Officials said the figures point to a limited but notable adjustment in income distribution trends across Türkiye.

Link to Syria's political transition and future outlook

Minister Ağar directly connected the export boom to developments in Syria, stating, "as Syria develops further and strengthens its political stability, the relations between the two countries will be further developed." He expressed confidence that trade figures would continue to improve, highlighting Türkiye's pivotal role in regional trade and its position as a key economic partner for Syria during its post-conflict transition period.

Broader context of Turkish export performance

The news on Syria comes within the context of strong overall Turkish export performance for the year. Ağar reported that Türkiye's total goods exports reached $270.6 billion in the January-November period, while combined goods and services exports hit $393.1 billion. The country also posted a substantial annualized foreign trade surplus in services of $122.5 billion over the same eleven months.

Official announcement and future targets

The final and official annual export figures are set to be announced at a high-profile ceremony in January 2026, which President Recep Tayyip Erdoğan is expected to attend. The event will also outline ambitious export targets for the coming year. Ağar concluded with an optimistic forecast, stating, "We hope to successfully complete 2026 by exceeding these figures by a wide margin."

Strategic growth and portfolio diversification

Aselsan's strategy of shifting towards higher value-added products is paying dividends. While its exports from 2015-2019 focused on radios and basic equipment, the portfolio has since expanded to include advanced systems like UAV payloads, smart munitions, and, most recently, sophisticated electronic warfare and air defense technologies. This diversification has significantly increased the average value of its export contracts.

Financial momentum and market expansion

Financial data reveals a surge in Aselsan's international business. In the first nine months of 2025 alone, the company's outstanding international orders reached $1.4 billion, a 171% increase year-over-year. Exports have grown steadily from $267 million in 2021 to over $1 billion in 2024. Europe and fellow NATO member states have become the company's fastest-growing markets, underscoring its rising global profile and ambition to climb into the top 30 of the world's largest defense contractors.

Future targets and industry standing

Aselsan, currently ranked 42nd on the Defense News Top 100 list, aims to increase the share of exports in its total order book from 8-10% in the early 2020s to 20-25% in the medium term. The landmark contract with Poland exemplifies this push into competitive, high-tech Western markets and reflects the growing international demand for Türkiye's indigenous defense solutions.

Strategic Capabilities and Regional Impact

Launched aboard a SpaceX Falcon 9 rocket in December 2021, the Turksat 5B is Türkiye's most powerful satellite to date. According to Transportation and Infrastructure Minister Abdulkadir Uraloğlu, it features a fully electric propulsion system and boasts at least 20 times the capacity efficiency of older-generation satellites. Its design life is approximately 15 years. This high-throughput capacity enables a wide range of critical services, including broadband data, corporate networks, maritime and aviation communications, and disaster response infrastructure. Uraloğlu emphasized that its coverage has allowed Türkiye to "provide commercial services across a large region."

A Catalyst for International Partnerships and Domestic Advancement

The satellite's capabilities have directly enabled a series of new international agreements. Turksat has recently signed key partnerships with major Chinese operators Chinasat and Spacesail to jointly develop in-flight connectivity (IFC) and other mobility solutions. Further deals with global operator Intersputnik and UK-based Avanti Communications aim to enhance services in markets like South Africa. Minister Uraloğlu noted that Turksat 5B was "at the center of many contacts and deals throughout the year." The technological experience gained from the 5B project was instrumental in guiding the development of Türkiye's first indigenously produced communications satellite, the Turksat 6A, launched in 2023.

A Foundation for a Growing National Space Ecosystem

The satellite represents more than just a communications tool; it is a pillar of Türkiye's growing space ecosystem. The project, managed in partnership with Airbus Defense and Space and SpaceX, included crucial technology transfer and domestic industry participation. Its success has paved the way for the next-generation Turksat 7A project. The continued operation of Turksat 5B secures vital bandwidth for national security, digitalization efforts, and commercial growth, positioning Turksat as a competitive regional operator for years to come.

Project Goals and Strategic Approach

The initiative is designed to tackle the skills gap between education and employment. Its primary objectives include modernizing learning environments, strengthening the professional capacity of teachers and vocational trainers, and fostering deeper collaboration with the private sector to ensure training aligns with actual labor market needs. Treasury and Finance Minister Mehmet Şimşek stated that the work is being carried out within the framework of Türkiye's Medium-Term Program, which prioritizes sustainable, productivity-driven growth and enhanced social welfare.

Part of a Broader Financing Strategy for National Development

This new funding contributes to a significant stream of international support secured by Türkiye in 2025. With this approval, the total amount of external financing secured from the World Bank this year under favorable conditions has reached $4.6 billion. Minister Şimşek emphasized the strategic importance of such investments, stating, "Productivity will be increased by strengthening Türkiye’s capacity in education, as well as in equipping young people with the skills required." He affirmed that the "successful cooperation between Türkiye and the World Bank will continue to strengthen in the coming period."

Context and Long-Term Economic Vision

The project reflects a core pillar of the government's economic strategy: transitioning to a high-value, high-productivity economy through human capital development. By investing in the skills of its young workforce—a key demographic—Türkiye aims to increase competitiveness, attract higher-value investment, and reduce youth unemployment, thereby securing more resilient and inclusive long-term economic growth.

Key Indicator Shows Persistent Gap

The net international investment position (NIIP), a crucial metric that subtracts a nation's external liabilities from its external assets, improved marginally but remained deep in negative territory at minus $323.3 billion. This figure, which reflects Türkiye's financial standing with the rest of the world, decreased by 1.5% compared to September. A negative NIIP indicates that the nation's liabilities to foreign entities exceed its external holdings, a common situation for many developing economies.

Breakdown of Assets Shows Strength in Reserves

A closer examination of the asset side reveals positive developments. Reserve assets, which include the central bank's holdings of foreign currency, gold, and other liquid international reserves, rose by 1.9% to reach $183.6 billion. This growth in reserves is a positive sign for economic stability and the country's capacity to manage external shocks. Direct investment assets, representing Türkiye's investments abroad, also increased by 1.3% to $73.5 billion.

Liabilities Composition and Economic Context

On the liabilities side, which represents foreign investments in Türkiye, direct investment liabilities fell by 1.9% to $209.6 billion. Meanwhile, portfolio investment liabilities, which include foreign holdings of Turkish stocks and bonds, saw a marginal increase of 0.1% to $131 billion. The figures are released amid a broader economic program in Türkiye focused on controlling inflation, rebuilding foreign exchange reserves, and encouraging a shift toward more sustainable growth and investment patterns.

A Promising Disinflation Trajectory

The more significant aspect of the Moody's outlook concerns inflation. The report forecasts that Türkiye's inflation rate, a persistent economic challenge, will close 2025 at approximately 35% (with a +/-2% margin). A notable disinflation trend is then projected, with the rate declining to 22% in 2026 and further to 18.5% in 2027. This forecast aligns with the stated goals of Türkiye's economic policymakers, who have prioritized bringing down inflation through monetary tightening and fiscal discipline.

Türkiye's Growth in a Global Context

Moody's report provides a comparative snapshot of major economies. Türkiye's projected growth rate for 2025 (3.2%) exceeds the forecasts for advanced economies like the United States (2.0%) and the Eurozone (1.1%). However, it remains below the rapid expansion anticipated in large emerging markets such as India (7.0%) and China (5.0%) for the same period. This positioning reflects Türkiye's status as an upper-middle-income economy navigating a transition toward greater price stability.

Implications for Economic Policy and Investment

The Moody's assessment suggests cautious optimism regarding the effectiveness of Türkiye's current economic program. If the projected decline in inflation materializes, it could bolster consumer purchasing power, reduce borrowing costs, and improve the overall investment climate. The steady, moderate growth forecast indicates an expectation of economic normalization rather than a boom, which may be viewed favorably for long-term sustainability.

Broader ADB Package for Recovery and Renewables

In addition to the exporter-focused loan, the ADB approved two further tranches of financing totaling €150 million and $150 million. These funds are designated for the Türkiye Development and Investment Bank to support post-earthquake recovery projects, renewable energy investments, and capacity-building initiatives. Combined with a previous €150 million loan finalized in November 2025, the total earthquake-related financing Türkiye has secured from the ADB now stands at roughly $1 billion.

Part of a Record External Financing Strategy

This latest package contributes to a substantial external financing effort for the quake zone, which has attracted around $8.4 billion since the disaster. Treasury and Finance Minister Mehmet Simsek highlighted that Türkiye secured a record $16.5 billion in external financing with favorable terms this year alone. He attributed this success to international confidence in the government's economic program, stating the funds will "revitalize economic activity," support sustainable growth, and boost production capacity in the affected region.

Long-Term Commitment to Regional Development

Minister Simsek emphasized that the government's work to "heal the earthquake-stricken region" is continuous, with a focus on securing long-term, favorable resources for local businesses and overall regional development. The strategic use of development bank financing underscores a key pillar of Türkiye's recovery strategy: leveraging international partnerships to fund reconstruction and foster economic resilience.