Turkey's Economy in Six Weeks: An Analytical Dashboard

Chart summary — five İTOSAM weekly bulletins | 7 August to 18 September 2026

A synthesis of the İTO Center for Strategic Studies bulletins of 7 August, 14 August, 28 August, 4 September and 18 September 2026 — focusing on inflation, growth, construction and property, the labour market and currency risk

The overall verdict

The Turkish economy is in a controlled landing, and the first signs of a bottom are visible in the output data — but the cost of this landing has been passed on to the labour market, corporate profit margins and the real value of assets. Volume data (output, sales) improved slightly in the latest bulletin; price and income data (profit margins, real house prices, employment) got worse.

What got better

• Output in all three main sectors better in July than in June

• Construction: first monthly growth (+1.1%)

• Infrastructure: from +4.5% to +14% year on year

• House sales: +3.1% month on month, a smaller annual decline

• Real estate activities: from −8.8% to −5.2%

• Overall economic confidence crossed 100

What got worse

• Producer inflation overtook consumer inflation

• Real house prices: −6.5% year on year

• Net profit margin: halved in two years

• 388 thousand jobs lost in one month; unused labour at 30.6%

• PMI: all 10 sub-sectors below 50

• Istanbul: −9.6% in monthly sales against +3.1% nationally

1. Inflation: cost pressure has taken the place of demand pressure

The key shift: in July producer inflation was below consumer inflation; in August it moved 0.73 points higher. Construction materials are still below the general index but have accelerated from 1.29% to 1.99% — the cost advantage of materials is closing.

Istanbul is always more expensive: the gap between Istanbul and national inflation was about 3.5 points in both months — a persistent deviation, not a fluctuation. Budget Istanbul projects at the İTO rate.

Energy, a lasting driver: two consecutive months of monthly increases of 6 to 10 percent. Meanwhile electricity and gas output has fallen 5.6% year on year — a supply constraint, not a demand spike. The root is geopolitical and will not be resolved soon.

2. Growth and profitability: slow growth, smaller profits

Four consecutive quarters of slowdown from the 4.8% peak. Seasonally adjusted quarterly growth (+1.1%) means the economy is not contracting, but it has lost momentum.

The first sign of a bottom: in the July data, all three sectors improved on June — services from 1.3% to 3.0%, industry from −1.4% to −0.3%, construction from −6.0% to −4.7%. One month of data is not enough to confirm a turn, but the direction is positive.

Profits are shrinking: firms' nominal sales doubled from TL 50.5 trillion to TL 107.7 trillion, but the net profit margin has almost halved. In 2025 nominal net profit grew 11.7% against inflation of 31.5% — a real decline of about 15%. Debt-to-equity ratio: 1.18.

3. Construction and property: the heart of this report

The cycle has reversed: from 11% growth in 2025 to negative in 2026. Fixed investment went from 7.3% to 0.6% — with inflation at 31.5%, a sharp real contraction.

Two economies in one sector: the gap between building construction (−8.0%) and infrastructure (+14.0%) went from 12 to 22 points in a single month. Private demand for housing construction has dried up; the public-sector client is holding the market up. Real estate activities improved from −8.8% to −5.2% — still negative, but the direction has changed.

The most important number for PERGAS: house prices are up 23% in nominal terms but down 6.5% in real terms. Istanbul has the smallest real decline (about 4%). The narrative that "property preserves value" no longer has statistical backing over a one-year horizon; the durable argument is rental income and a multi-year horizon.

All four measures of the property sector — asset prices, services prices, turnover and output — are in negative real territory. Property service fees and commissions are about 7 to 10 points behind inflation.

The buyer mix has changed: mortgaged sales grew 30.9% in the first seven months while cash sales fell 11.7%. Mortgage growth slowed to 7.2% in August — it remains to be seen whether it continues or has peaked. The decline in the market as a whole has eased from −17% to −14.7%.

A new Istanbul divergence: for the first time in this period, Istanbul fell behind the national average, by a margin of 13 points. The only positive component: new-build homes in Istanbul (+0.2% year on year), against −16% for the city's market as a whole. Sales to foreign nationals: a 1.7% share — a historic low.

4. Activity and confidence: apparent improvement, real weakness

The headline index has risen for three consecutive months, but the number of sub-sectors above 50 went from three in July to zero in August. Non-metallic minerals (cement, glass, ceramics) fell back from 50.3 to 49.4. The twenty-ninth consecutive month below the threshold.

Overall confidence went above 100, but with help from consumers and industry. Construction, at 83.1, is the most pessimistic sector of the economy, and its level of registered orders has fallen from 82.1 to 78.9. SAMEKS crossing 50 is mainly a statistical effect of longer delivery times, not a boom.

5. The labour market: where the cost of the landing is paid

Construction lay-offs have begun: employment growth in the sector halved in a single month, from 7.1% to 3.5% — the same mismatch between negative output and positive employment that was not sustainable. The annual loss of industrial jobs accelerated from 54,682 to 71,737 people.

388 thousand jobs lost in one month, and almost a third of the potential labour force unemployed, underemployed or discouraged. A weakening labour market reaches housing demand with a lag of six to nine months — especially the loan-driven buyer who is now the engine of the market.

6. The external balance and the value of the currency: a medium-term risk

Excluding gold and energy, the current account showed a USD 1.5 billion surplus in June — the entire deficit comes from energy and gold. The services surplus offsets 82% of the goods deficit, and half of it is tourism. The net errors and omissions item (−20.4) is more than half of the current account deficit.

Over the past year only gold and the stock market delivered positive real returns. Housing −6.5% and foreign currency between −11 and −13%. The negative return on foreign currency signals an overvalued lira (IMF estimate: 12.1%), with reserve adequacy at 78.7% — a combination that keeps the risk of a medium-term currency adjustment alive.

7. Indicator scorecard — first vs latest reading

8. Implications for PERGAS

• Contracts: indexation to D-PPI (Yİ-ÜFE) instead of CPI (TÜFE), a separate energy clause, and budgeting Istanbul projects at the İTO rate. With an average profit margin of 2%, every cost risk that is transferred threatens the entire profit.

• Property sales: payment plans and bank partnerships matter more than discounts; focus on new-build — the only positive component of the Istanbul market.

• Investment and citizenship advisory: set client expectations with the real price (−6.5%), not with nominal growth (+23%). Build the case on rent and a multi-year horizon.

• Project management: the only area of construction with double-digit growth is infrastructure projects (+14%).

• Property service fees: 7 to 10 points behind inflation — a tariff review is needed.

• Currency risk: for long-term foreign-currency commitments with lira income, hedging today is cheaper than tomorrow.

9. What to watch in the coming bulletins

• Will construction record a second month of monthly growth? If so, the bottom of the cycle is confirmed.

• Will the fall in Istanbul sales repeat? A repeat means a structural change in the geography of demand.

• Will growth in mortgaged sales keep slowing? This is the current engine of the housing market.

• The gap between D-PPI and CPI: whether it reverses or widens will set the path of profit margins.

• Construction employment: reaching zero or turning negative will set off the six-month lag through to housing demand.

This dashboard is an analytical summary of five weekly economic bulletins of the İTO Center for Strategic Studies (İTOSAM), dated 7 August, 14 August, 28 August, 4 September and 18 September 2026. Raw data is drawn from the sources cited in the bulletins (TÜİK, TCMB, İTO, İSO, MÜSİAD, IMF, UNCTAD). The calculations of real growth and profit margins, the real house price figures by city, the indicator scorecard and the implications are added commentary and are not part of the original bulletin text. In the Persian edition, months are given with Persian names for readability: Khordad ≈ June, Tir ≈ July, Mordad ≈ August.