Türkiye's economy grew 2.5% year-on-year in the first quarter, slightly below poll forecasts according to official data on Monday, with growth slowing for a third consecutive quarter. The continued slowdown in growth in the January-March period partially coincided with the Iran war, which sent energy prices soaring and revived inflationary pressures. The conflict's impact on growth going forward remains unclear. The strongest branch of economic activity during the first quarter was information and technology, which grew 9.5%, while agriculture, forestry and fishing grew 4.6%, Turkish Statistical Institute (TUIK) data showed. Industry shrank 0.8%. The lira was little changed at 45.9160 against the dollar after the data. TUIK said first-quarter gross domestic product (GDP) grew 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, In a Reuters poll, economic growth was estimated to have slowed to 2.7% in the first quarter, while in 2026 as a whole the economy is expected to expand by 3.15%. There was no revision to the 2025 growth rate of 3.6%, the data showed. After growing 4.7% in the second quarter last year, growth slowed to 3.8% and then 3.4% in the following two quarters. First-quarter estimates from nine economists in the poll ranged from 2% to 3.7%. Economists are closely monitoring the central bank's response to the inflation, which surged to 4.18% month-on-month in April for an annual rate of 32.87%. In its second inflation report of the year, the central bank raised its year-end inflation interim target from 16% to 24%, while signaling that all options remain on the table for its next interest rate decision. The bank sold billions of dollars in foreign reserves in the latter part of May after a court ruling ousted the leader of Türkiye's main opposition Republican People's Party (CHP).
