Türkiye should maintain credible and prudent macroeconomic policies and implement far-reaching structural reforms to strengthen productivity and ensure sustainable growth, the Organization for Economic Co-operation and Development (OECD) said Thursday.
The recommendation was part of the OECD’s newly released report OECD Economic Survey of Türkiye, published Thursday as part of its country-based economic review series.
“Maintaining tight monetary policy and fiscal discipline will be key to ensure sustainable economic convergence with other OECD countries and a continued decline in inflation towards the 5% target,” OECD Secretary-General Mathias Cormann said during the presentation of the survey in Istanbul.
“Strengthening fiscal discipline will require structural reforms to improve spending efficiency and optimize tax revenues,” he added.
According to the report, the Turkish economy has been one of the fastest growing in the OECD over the past decade, expanding at an average annual rate of 4.9%.
Living standards have nearly quadrupled during this period, while notable gains have been recorded in labor market participation and social indicators.
Labor force participation among people aged 15-64 rose from around 50% in 2005 to 60% in 2023, and the poverty rate was halved.
The OECD forecasts Türkiye’s gross domestic product (GDP) will grow by 3.1% in 2025 and 3.9% in 2026.
The organization noted that following the May 2023 elections, Türkiye began a process of economic policy normalization, with the government taking the necessary steps to stabilize the macroeconomic framework and put the Turkish economy on a sustainable path.
The new tightening approach to monetary and fiscal policies has contributed to stabilizing financial markets, increasing confidence and reducing economic uncertainty.
Maintaining the prudent macroeconomic policy stance that has contributed to restoring sustainable growth is also critical to bringing inflation fully under control.
However, the OECD cautioned that these tighter financial conditions and restrictive policies are likely to weigh on household consumption and overall economic activity over the next two years.
Türkiye’s annual inflation rate is expected to be at 31.4% by the end of 2025 to drop to 17.3% in 2026.
Türkiye’s public debt to GDP ratio remains relatively low, while the budget deficit is expected to narrow to 2.6% in 2026.