Türkiye’s economy is entering the new year buoyed by rising confidence indices and easing inflation expectations, signaling improved sentiment among households, businesses and market participants.
The economic confidence index, which dipped to 96.3 in July after falling below the threshold level of 100 in spring, rebounded in the final months of the year to reach 99.5 in November and December, its highest level in eight months.
The consumer confidence index, starting 2025 at 81, the year’s lowest, ended at 83.5 after a volatile trajectory. Meanwhile, the real sector confidence index, which began the year at 102.6 and fell to 98.4 in June, climbed steadily to 103.7 in December, marking its strongest reading in two years. The services sector confidence index also closed the year on a high note at 112.3, the highest level in nine months.
According to the Central Bank’s December Market Participants Survey, monthly inflation expectations eased from 1.16 percent to 1.08 percent, while year-end consumer price inflation forecasts declined from 32.20 percent to 31.17 percent. Expectations for inflation 12 months ahead fell to 23.35 percent and for 24 months ahead to 17.45 percent.
İsmet Demirkol, founder of Pariterium Consulting, highlighted that the Central Bank’s continuation of tight monetary policy has contributed to falling inflation and rising confidence. Demirkol added that renewed bond purchases following interest rate cuts, reduced currency risk and favorable external conditions — such as a stronger euro against the dollar and lower oil prices — have further supported optimism.
Looking ahead, Demirkol emphasized that expectations of continued tight monetary policy in 2026 are helping stabilize currency risks and sustain positive sentiment, reinforcing the upward trend in confidence indices.
Meanwhile, in a reflection on Türkiye’s economic performance in 2025, Treasury and Finance Minister Mehmet Şimşek highlighted strengthened fiscal discipline, easing inflation, a more sustainable current account balance and moderate yet steady growth.
He underscored that macro-financial stability had improved, while the country’s risk premium and external borrowing costs had declined significantly.
According to an infographic shared with his statement, the budget deficit, which stood at 5.1 percent of GDP in 2023, narrowed to 4.7 percent last year and is projected to fall further to 3.1 percent in 2025.
Şimşek also pointed to a sharp drop in Türkiye’s credit default swaps (CDS), which fell to their lowest level in seven and a half years. From 703 basis points in May 2023, CDS declined by 499 points to 204 by December 2025. External borrowing costs followed a similar trajectory, with the yield on five-year eurobonds dropping from 11.3 percent in May 2023 to 5.4 percent at the end of 2025.
Reserves saw a notable increase during the same period, Şimşek noted. Gross international reserves, which were $98.5 billion in May 2023, rose by $95.4 billion to reach $193.9 billion by December 2025. Excluding swaps, net reserves shifted from a deficit of $60.5 billion to a surplus of $67.3 billion.
