WOOD Flash – Türkiye macro: 2Q GDP momentum points to a stronger 2025E outlook

The 2Q25 GDP release showed stronger growth both annually and quarterly, well above our and the consensus expectations. Supportive base effects played a role, but momentum was clearly underpinned by resilient domestic demand and robust investment. On an annual basis output expanded by 4.8% yoy in 2Q25; while, on a qoq seasonally-adjusted basis, GDP rose 1.6% – the fastest pace in two years – despite the tighter post-March financial conditions and above-consensus 0.6% qoq growth forecast, as a rebound in investment and inventory accumulation offset weaker household spending, government consumption, and net exports. We had above consensus growth for 2025E in our forecasts already, but this outturn increases the upside risks for the outlook, amid the ongoing monetary easing and decent high frequency data from the country. The surprise strength may slow the pace of rate cuts; however, as long as the inflation data remain supportive, we see this as only a minor risk. With the ESI jumping in August to its highest level since March, we have revised our 2025E GDP forecast up to 3.5% (from 3.0%). The risks are tilted to the upside but, given the recent volatility in sentiment, we remain cautious on 2H25E.