THE GLOBAL ECONOMY

In 2025, the global economic outlook was shaped by a backdrop of heightened uncertainty regarding trade policies and geopolitical tensions. According to the IMF’s January 2026 World Economic Outlook report, global growth is expected to be 3.3% in 2025 and 2026, followed by a moderate slowdown to 3.2% in 2027. Under this outlook, the expectation that tariffs will reach historically high levels and that uncertainty surrounding trade policies will persist into 2026 points to a significant loss of momentum in global trade volume. In this context, the IMF expects a significant slowdown in global trade, forecasting that after a 4.1% increase in global trade volume in 2025, growth will decline to 2.6% in 2026 as the effect of front-loaded import demand wanes.

US Economy

In the US, the economic outlook for 2025 was shaped by protectionist trade policy measures, uncertainties triggered by the federal budget crisis, and the trajectory of inflation. At the beginning of the year, the prospect of tariff measures targeting critical trade partners, including Canada and Mexico, briefly increased risk perception. However, in the subsequent period, the postponement of implementation, the narrowing of scope, and exemptions granted to strategic product groups brought the process to a manageable level, contributing to economic activity showing greater resilience than expected. Indeed, despite the annualized contraction in the first quarter, substantial investments in data centers and artificial intelligence infrastructure, combined with strong domestic demand underpinned by robust financial markets, contributed to an acceleration of growth in the second and third quarters.

FED

With regard to monetary policy, a cautious and data-driven approach prevailed throughout the year. Concerns that tariff-induced cost pressures could derail the disinflation path, along with persistent uncertainty regarding inflation dynamics for much of the year, were decisive in the Fed’s decision to maintain a wait-and-see stance during the first half and summer months. Subsequently, with the partial normalization of tariff measures, more mixed signals from the labor market, and evaluations of growth composition, the Fed initiated an interest rate cut cycle in September, concluding the year with three 25-basis-point reductions. During this period, the stalemate in federal budget negotiations, which led to a government shutdown that began on October 1 and ended with a temporary budget in mid-November, was among the factors that kept the perception of uncertainty high through data flow and expectation channels. At the beginning of 2026, data sensitivity continues to guide the course of monetary policy. The appointment/confirmation schedule following the end of the Fed Chair’s term in May 2026, along with the distribution of opinions within the Committee, will be closely monitored for market communication and expectation management.

Eurozone Economy

The economies in the European region, our largest export market, have maintained relative resilience in an environment of high uncertainty. In the first half of 2025, while fluctuations in external demand and expectations periodically weakened the growth outlook, real wage increases and a resilient labor market supported domestic demand. With growth re-accelerating in the third quarter, the outlook for the full year settled on a more balanced footing, with full-year growth for 2025 reaching 1.5%. From the perspective of external demand, deflationary trends in China intensified competition in global markets by driving down export prices, acting as a constraint on the Eurozone’s export pricing and external demand performance. Regarding intra-regional dynamics, the re-evaluation of the debt brake framework in Germany, the region’s largest economy, to allow more room for defense and infrastructure spending was one of the prominent topics for the outlook. Following consecutive years of contraction, it is assessed that the growth composition could shift to a more balanced footing on a base where recovery can gradually begin, driven by stronger public demand from increased defense and infrastructure-focused public spending, a gradual recovery in exports, signs of a bottoming out in housing investments, and wage increases supporting real income.

ECB

With regard to monetary policy, as inflation in the Eurozone converged toward the target, the ECB implemented a total of 100 basis points of rate cuts over four meetings in 2025, each by 25 basis points; in the subsequent period, it emphasized that the rate-cutting cycle had been halted and that monetary policy had shifted to a more neutral stance, highlighting a framework in which decisions would be assessed in a data-dependent manner.” This approach is considered a policy mix aimed at making gains in price stability permanent on the one hand, while monitoring the effects of normalization in financial conditions on growth and demand over time on the other.

China and Emerging Economies

In 2025, the outlook for emerging markets evolved within a framework shaped by global uncertainties and a volatile trade policy agenda. At the center of this framework were weak domestic demand and accompanying price pressures in China, the largest emerging market economy. In China, domestic consumption failing to materialize at the desired pace and continued weakness in the real estate sector limited demand and economic confidence, while the weak trend in producer prices and low pricing behavior fueled by intense competition made it difficult for deflationary pressures to fully dissipate.

This situation increased the price competitiveness of Chinese-made products, intensifying competition in global markets. The weakening of pricing power, particularly in industrial goods, created downward pressure on export margins and market share in emerging economies with product baskets similar to China’s. When the renewed prospect of tariff measures targeting China and other critical supply chain countries in Asia was added to these developments during the year, a significant rebalancing in the direction of capital flows was observed. During periods of heightened tariff uncertainty, as risk perception increased and visibility weakened in Asia, a portion of portfolio flows shifted to Eastern Europe, supported by a more predictable disinflation path, depth in local currency markets, and nearshoring themes close to Europe. In this context, countries like Poland and Romania stood out as examples where demand for local currency assets remained relatively strong, creating an environment where financial conditions were supported by declining risk premiums and reduced currency volatility.

TÜRKİYE’S ECONOMY

For Türkiye’s economy, 2025 was a period in which the effects of the disinflation-focused policy mix became increasingly evident, and the pursuit of a more balanced growth pattern gradually continued despite uncertainty in external conditions. While the normalization trend in domestic demand continued, tight credit and financial conditions kept the economic rebalancing channel active. Economic activity was observed to maintain its positive course throughout the year, despite quarterly fluctuations. In this context, year-on-year growth in the third quarter of 2025 was 3.7%.

On the external demand side, in an environment where global trade lost momentum and price competition intensified, Türkiye’s export performance and the balancing role of service revenues came to the forefront. According to finalized foreign trade data from TurkStat, goods exports reached a record level of USD 273.4 billion for the full year 2025, indicating a resilient trend in goods exports. In the same period, with annualized service exports rising to USD 123.1 billion, total annualized goods and services exports reached USD 396.5 billion. The fact that total exports exceeded the USD 390 billion target confirms that the services component of external revenues has strengthened. In this outlook, while the growth trend in main markets continued to be a determining factor in external balance dynamics, rising precious metal prices despite stable energy prices and developments in the import composition were among the topics that periodically limited the contribution of net exports to growth.

On the monetary policy and financial conditions front, 2025 was marked by a framework in which a tight stance was maintained in line with price and financial stability goals, while a measured normalization step was introduced in the second half of the year. As the disinflation process progressed, the downward trend in inflation was maintained, and the macroprudential framework was implemented as a complementary measure to monetary policy, with the objectives of strengthening the monetary transmission mechanism, increasing the share of Turkish lira instruments, and curbing dollarization pressures. On the global side, while the risks posed by the US-led tariff agenda on growth and external demand were monitored, it can be assessed that due to Türkiye’s foreign trade structure and product/country diversity, the impact was more differentiated at the sector and product group level, creating a “limiting but manageable” set of external conditions for the overall macro outlook.

TURKISH BANKING SYSTEM

In 2025, the outlook for the Turkish banking sector was determined by the effects of the macroprudential framework supporting the disinflation program on credit growth and composition. As of December 2025, the sector’s total assets increased by 43.8% year over year to TL 46.9 trillion, while total credits rose by 44.1% to TL 23.1 trillion; the share of loans in total assets remained at approximately 49.3%. The increase in the share of liquidity buffers indicates a more prudent stance in balance sheet management. While credit expansion was generally more controlled, commercial loans increased by 41.6% year-on-year. Under high interest rates and selective tightening conditions, working capital and short-term needs remained more prominent in the corporate segment, while the recovery in long-term investment credits showed a limited outlook. In this context, the 43.9% annual increase in foreign currency commercial loans indicates that the appetite for foreign currency borrowing periodically strengthened with the expectation of real appreciation in the TL. With regard to funding, while deposit growth continued, the more rapid expansion of non-deposit sources supported funding diversification. Although the increase in the stock of non-performing loans pointed to pressure on asset quality, strong profitability and the preservation of capital buffers were among the key factors supporting the sector’s resilience.