Turkey’s Economy Rebounds, but Rising Imports Threaten Trade Balance

Turkey’s economy bounced back in the fourth quarter of 2024, ending two consecutive quarters of contraction. However, a surge in imports at the start of 2025 is raising concerns about the country’s trade deficit, according to data from Turkstat.

Economic Growth Led by Construction

The gross domestic product (GDP) grew 3% in the final quarter of 2024, contributing to a full-year growth rate of 3.2%. This recovery was largely driven by the construction sector, which posted an impressive 9.3% expansion for the year.

However, industrial output barely grew, registering just 0.5% growth. Several key sectors, including services, real estate, education, administration, health, and social services, also fell short of the national GDP growth rate.

Rising Imports Widen Trade Deficit

Turkey’s trade balance deteriorated in January 2025, with import growth surpassing export growth by 5 percentage points, leading to a $7.5 billion trade deficit.

Imports surged 10% year-on-year, with consumer goods imports soaring 20%, while the share of capital goods declined. This trend casts doubt on the government’s economic strategy, which aims to curb domestic demand while boosting domestic production and exports.

“When we look at the import data, the composition of it is also very bad,” said Filiz Eryılmaz, associate professor of economics at Uludağ University. “Consumer goods imports are very strong, but we do not see an increase in investment or intermediary goods supporting production.”

Meanwhile, exports grew 5% in January, driven by manufactured goods, while agriculture and mining underperformed.

Economic Outlook: Challenges Ahead

Although Turkey’s economy rebounded in late 2024, concerns persist over its trade balance, weak industrial growth, and rising consumer imports. The government may need to reassess its economic policies to ensure sustainable growth, strengthen domestic production, and address the widening trade deficit.