Turkey Economy Slows to 2.5% Growth Amid Iran War
Turkey's economy grew 2.5 percent in the first quarter, its slowest in over a year, as the Iran war lifted energy costs and pushed inflation above 32 percent; the central bank raised its 2026 inflation target to 24 percent. Even so, Ankara projected regional weight: intelligence chief Ibrahim Kalin met Hamas leaders on the Gaza ceasefire, and Erdogan announced gas exports to Syria and a new Turkey-Azerbaijan-Georgia-Bulgaria power corridor. Erdogan denied any government hand in the opposition CHP's court-ordered turmoil, as floods across nine provinces drew a 13,000-strong emergency response.
Turkey's economy lost momentum at the start of 2026, growing 2.5 percent year-on-year in the first quarter -- down from 3.4 percent and below forecasts -- as the US-Israel war on Iran sent energy prices soaring and revived inflation, official TurkStat data showed. Industry contracted 0.8 percent and exports fell 12.7 percent, though agriculture and services kept growth positive. Finance Minister Mehmet Simsek noted 23 straight quarters of expansion and national income above $1.6 trillion, but consumer prices were still up 32.4 percent in April, prompting the central bank to lift its end-2026 inflation target to 24 percent from 16 percent.
Even under economic strain, Ankara leaned into its regional role. As one of four guarantors of the Gaza ceasefire alongside Egypt, Qatar and the United States, Turkey's intelligence chief, Ibrahim Kalin, met senior Hamas officials in Ankara to discuss the truce's next phase; Hamas said it had complied and briefed him on alleged Israeli violations, ahead of a separate Hamas meeting with mediators in Egypt on Wednesday. Turkey also condemned a raid by Israeli ultranationalists on the Al-Aqsa Mosque, calling it a violation of international law.
President Recep Tayyip Erdogan pressed Turkey's energy ambitions. He announced the launch of Turkish-Azerbaijani natural-gas exports to Syria -- initial flows of 1.2 billion cubic metres a year, drawn from the Shah Deniz field and used to restart power plants in conflict-hit areas -- and unveiled plans for an electricity corridor linking Turkey, Azerbaijan, Georgia and Bulgaria, which he called "the electricity version of TANAP." At the Baku Energy Week, Turkey also outlined a $30 billion upgrade of its grid over the next decade.
At home, Erdogan sought to distance his government from the opposition's turmoil, saying after a Cabinet meeting that it had no role in the legal disputes engulfing the Republican People's Party (CHP) -- whose 2023 congress a court annulled last month, reinstating Kemal Kilicdaroglu. And the disaster authority AFAD said it had deployed more than 13,000 personnel and 5,656 vehicles between May 21 and 31 to respond to 110 landslides and rockfalls across nine provinces, from Trabzon to Hatay, that damaged dozens of homes.