Over the past few years, I have been closely watching Turkey’s economy navigate one of its toughest tests in recent memory. High inflation, a volatile lira and pressure on external financing have kept policymakers on their toes, with the currency often in focus as its swings shook investor confidence.
What impressed me, though, is how the country has pushed back rather than giving in. Through a mix of monetary tightening and fiscal reforms, the government has taken decisive steps to stabilise the economy, restore confidence and lay the groundwork for long-term recovery.
The latest figures, reported on 1st September, suggest that these efforts are starting to pay off. Growth remains resilient, driven by strong domestic demand, especially household spending, which has surged over the past year (Bloomberg). Even after the sharp rate hike in March, Turkey’s economy continues to beat expectations, signalling an encouraging recovery.
Key reforms reshaping Turkey’s economy
At the heart of Turkey’s economic challenges has been persistently high inflation and a volatile lira, which have strained household budgets, driven up import costs and unsettled markets. In response, policymakers have tightened monetary policy, sharply raising interest rates to control inflation and reassure investors that price stability is now the priority, even at the cost of slower short-term growth.
The government has also moved toward greater fiscal discipline cutting back spending and reducing past liabilities. An important move was winding down the costly FX-protected deposit scheme (KKM), which had shielded savers from currency swings but strained public finances. This step signalled a turn away from temporary fixes toward more sustainable measures, while helping restore confidence in the lira.
Turkey is also strengthening its foreign exchange reserves, providing the government with greater flexibility to handle external shocks and boost investor confidence. Taken together, these steps reflect an economy working to regain credibility and build a more stable foundation for growth.
Exports as a source of strength
Amid ongoing policy reforms, Turkey’s export sector has also continued to perform strongly (Hurriyet Daily News). Its diversified industries – from automotive and textiles to machinery and electronics – have tapped global demand, generating steady stream of foreign exchange earnings. Strong exports have helped the economy weather lira weakness and reduce external risks. For me, this strong performance of Turkish exporters shows that a productive real economy is key to maintaining macroeconomic stability.
Tourism as a vital buffer for growth
Another key driver of Turkey’s economic resilience has been its tourism industry. Speaking as someone deeply involved in the sector, I am encouraged by its strength – 2025 is projected to contribute around 12% of GDP, or roughly $135 billion, according to the World Travel & Tourism Council (WTTC). Despite global uncertainties, Turkey continues to welcome millions of visitors each year, proving that it remains one of the world’s most attractive destinations (Daily Sabah).
Tourism strengthens Turkey’s economy by offsetting energy import costs, bringing in foreign currency and signaling that core industries remain strong even during economic turbulence. It is a steady anchor supporting both growth and confidence.
A path toward long-term stability
Taken together, Turkey’s targeted economic measures – tighter monetary policy, fiscal discipline and stronger reserves – are steadily restoring market confidence. Investors who once doubted the outlook now see a more credible, disciplined approach to stabilisation.
Some challenges remain: inflation is still high, credit is tighter and reliance on external financing leaves the economy sensitive to global capital flows. Yet these pressures are not unique to Turkey – they reflect broader trends across emerging markets. What sets Turkey apart is its determination to confront them directly through policy recalibration and structural reform.
Latest economic figures confirm the reforms are working, stabilising the economy today while building a foundation for sustainable growth. Supported by a strong export base, vibrant tourism and improving market sentiment, Turkey is navigating turbulence with a clearer path to long-term stability – a direction that leaves me confident in its future prospects.
