Milli Re 2025 Annual Report

Economic Overview Türkiye’s exports increased by 4.4% year-on-year in the twelve months to end-2025 and reached USD 273.4 billion versus imports worth USD 365.4 billion, which increased by 6.2%. Throughout 2025, foreign trade deficit expanded by 11.9% and rose from USD 82.2 billion to USD 92 billion. The ratio of exports to imports slid down from 76.1% in 2024 to 74.8% in 2025. While tourism revenues maintained their rise throughout 2025, net services revenues went up by 3.5% to USD 63.5 billion, marking its highest-ever level. Notwithstanding, paralleling the rapid escalation in foreign trade deficit, the current deficit broadened by 142% as compared to 2024 and rose to USD 25.2 billion. Throughout 2025, the foreign trade deficit defined in the balance of payments widened by 24.5% to USD 69.7 billion. During the reporting period, net non-cash gold imports amounted to USD 20.1 billion and net energy imports to USD 47.2 billion. Thus, current account surplus, excluding gold and energy, slumped by 19.5% as compared to the previous year to USD 42.1 billion in 2025. As part of the disinflationary efforts, the Central Bank of the Republic of Türkiye (CBRT) lowered the policy rate from 50% to 47.5% at the end of 2024, thus initiating an easing cycle. The rate cuts continued through the first quarter of 2025; however, political developments in the country increased the volatility in financial markets, as the result of which the policy rate was hiked to 46% in April. In the July meeting, the policy rate was decreased from 46% to 43%. The rate cut continued in the September meeting, where the rate was reduced to 40.5%. The CBRT prefers to maintain the asymmetric corridor structure. The CBRT pulled the policy rate down to 39.5% in October and further down to 38% in December. As of year-end 2025, the CBRT’s gross FC reserves stood at USD 74.5 billion and total reserves at USD 189 billion. The return to rational policies helps re-establish international investors’ trust, which enables lower-cost borrowing at longer-terms from international markets for Türkiye; meanwhile, the country risk premium (CDS – Credit Default Swap) declined significantly. While net direct investments shrank by 36% across 2025, net capital outflows from portfolio investments amounted to USD 1.7 billion. On another front, net capital inflow on other investments increased by 244% in 2025 as compared to 2024. In 2026, domestic demand conditions and domestic gold demand and gold prices will presumably continue to act as the primary risk factor on headline current deficit; possible energy price hikes stemming from the war affecting the Middle East will inevitably add to the pressure. Source: TURKSTAT, CBRT, Republic of Türkiye Ministry of Treasury and Finance, IMF As of year-end 2025, the CBRT’s gross FC reserves stood at USD 74.5 billion and total reserves at USD 189 billion. 58 MİLLİ RE 2025 Annual Report