OECD Slashes Turkey Growth Forecast, Cites Energy Costs and Mideast War

The Organization for Economic Co-operation and Development (OECD) has significantly lowered its economic growth forecast for Turkey, projecting a mere 2.7% expansion for the current year, down from a previous estimate of 3.1%. If realized, this would mark the lowest growth rate in Turkey since 2020. The OECD also revised down its growth projection for 2027 from 3.8% to 3.6%.

The organization attributes the economic slowdown to several factors, including high energy prices, supply chain disruptions, and the repercussions of the conflict in the Middle East, which heavily impacts Turkey as a major energy importer. Alongside the decelerating growth, inflation remains a critical challenge for the Turkish economy.

The OECD has raised its inflation forecasts for Turkey, estimating it at 31.5% for 2026, an increase from the previous 28.4%, and 24.7% for 2027, up from 18.3%. Despite these upward revisions, the OECD anticipates a gradual decline in inflation over time.

Globally, the OECD forecasts a 2.9% growth rate for the current year. Projections for other major economies include 2.2% for the United States, 1% for the Eurozone, and 4.5% for China. Conversely, Saudi Arabia's economy is expected to contract by 1.8% due to impacts on its energy production and exports.

The OECD warns that these economic outlooks are highly contingent on developments in the Middle East. Continued disruptions to oil and gas exports from the Persian Gulf could lead to further increases in energy prices, exacerbating inflation and hindering growth, particularly in energy-importing nations like Turkey.