Macro and Politics
Tacirler Investment
* TURKSTAT will release 2Q25 GDP figures today at 10:00 local time. We expect annual growth to accelerate from 2% in 1Q25 to 3.8% in 2Q25, largely supported by favorable base effects. However, we anticipate a softer sequential performance relative to the previous 1% q/q expansion. According to ForInvest’s survey, the market median forecast aligns with our house estimate at 3.8% y/y for 2Q25. Early indicators for 3Q25 suggest a moderation in annual growth, and we maintain our 2025 year-end GDP forecast at 3.1%.
*Istanbul Chamber of Industry (ICI) Turkey August Manufacturing PMI will be announced @ 10:00 local time. ICI Turkey Manufacturing PMI declined further from 46.7 to 45.9 in July, marking the lowest reading so far this year and the weakest since October 2024. Remaining below the 50-threshold since March 2024, the index continues to signal a sustained loss of momentum in manufacturing activity for over a year. Softening demand conditions continue to weigh on new orders and output, with the weakness appearing to have broadened across most sectors. Although the rate cuts that commenced in July are expected to bring about a partial improvement in demand dynamics in the second half of the year, we view the likelihood of a pronounced near-term rebound in industrial activity as limited.
* The adjusted unemployment rate declined to 8% in July from 8.4%. As per the composite measure of labor underutilization – including time related underemployment, potential labor force and unemployment – eased to 29.6% from 32.7%, though remaining elevated. Moreover, Within the components, the combined rate of time-related underemployment and unemployment fell to 19.1% from 22.8%, while the combined rate of unemployment and potential labor supply edged down slightly to 19.9% from 20.2%. The persistently elevated level of labor underutilization points to a weaker labor market than headline data suggest. Sustained high levels of time-related underemployment and potential labor supply indicate that overall labor underutilization is likely to remain elevated in the coming period.