BBVA Updates Turkey Economic Forecasts; Growth Slows, Inflation Persists

Spanish bank BBVA, a major player in the Turkish financial market, significantly altered its economic forecasts for the country in its new report published in June 2026. This revision comes as the Turkish economy grapples with challenges arising from regional tensions and contractionary monetary policies [1].

Growth Forecast Cut Due to Regional Tensions BBVA Research reduced its GDP growth forecast for Turkey for 2026 from 4% to 3% [2]. The bank's analysts believe that the ongoing conflicts in the Middle East (Iran war) and tight financial conditions have created major downside risks for the growth outlook. Official data shows that the Turkish economy grew by 2.5% in the first quarter of 2026, indicating a slowdown compared to previous periods [4].

Stability in Inflation Forecast and Control Challenges Despite existing pressures, BBVA maintained its consumer price inflation (CPI) forecast for the end of 2026 at 30% [3]. This comes as the official inflation rate was announced at approximately 32.6% in May 2026. Reports indicate that food and energy prices remain the primary drivers of inflation, but price pressures are expected to moderate somewhat with the gradual reopening of trade routes like the Strait of Hormuz in the second half of the year [1][3].

Monetary Policy and Interest Rate Outlook Following the Central Bank of the Republic of Turkey's (TCMB) recent decision on June 11, 2026, to keep the interest rate steady at 37% for the third consecutive month, BBVA predicted that this rate would remain unchanged until the end of the current calendar year [4]. Although some analysts previously expected an interest rate hike to 40%, the Central Bank preferred to continue its current policy, relying on a slight improvement in monthly inflation in May [1].

Exchange Rate and Oil Price Forecast In another part of the report, BBVA updated its estimate for the Dollar-to-Lira exchange rate. The bank expects the dollar rate, currently around 46.26 Lira, to reach the 52 Lira mark by the end of 2026 [1]. Additionally, the average Brent oil price for the current year is projected at $90 per barrel, which will play a key role in Turkey's trade balance and production costs [2].