Two Turkeys

Turkey’s per capita income climbed to $18,040 in 2025. On paper, the country is getting richer quickly. Official figures show real economic growth of 3.6%, while GDP at current prices rose 41.3% to more than 63 trillion lira.

But there is another Turkey. The World Bank still classifies the country as upper-middle income, even though its 2027 fiscal-year threshold for high-income economies is $14,375 per person. The bank specifically notes that Turkey remains in the group because the Atlas method has limitations for economies experiencing persistently high inflation.

The gap begins with the exchange rate. Dollar-denominated GDP per capita is calculated by converting nominal GDP in lira using the average exchange rate. If high inflation rapidly lifts nominal GDP while the currency does not weaken at the same pace, income in dollars rises. The country can therefore look richer in dollar terms even if production and welfare have not increased to the same extent.

The article also questions the deflator used to strip price increases from nominal output. If actual price rises are understated in the indexes, real growth can also be overstated. That puts both consumer inflation and the broader price system used to calculate real GDP under scrutiny.

Industrial and labor data tell a less prosperous story. The manufacturing PMI fell below 50 in 46 of the 60 months from September 2021 through August 2026, indicating worsening conditions for roughly 77% of the period. It remained in contraction for all 29 months from April 2024 to August 2026. In the second quarter of 2026, industrial employment fell 2.2% year on year even as hours worked increased, while broad labor underutilization reached 29.9%. The result is what the article calls “two Turkeys”: headline growth alongside weak industrial performance and unused labor.