Turkish Assets Outperform Amid Inflation Controls
Turkish financial assets are projected to outperform many emerging market peers in 2026, though the lira remains weak. The government is tightening controls to curb food price inflation ahead of Ramadan. These efforts have drawn praise from the IMF, which endorsed the country's recent inflation-fighting measures, potentially boosting international investor confidence.
- **Macroeconomic Outlook: Turkey's central bank has revised its year-end inflation forecast for 2026 to a range of 15% to 21%, up from the previous 13-19%. [Despite this, the IMF](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHXPiwqpY62rpzYa3GmQb81XLABJb2Rj573YhOX0fZRNijjH5fSsdkdlBlHqYdjvAdRl9RlQhekPsNtIaN_TiqXMSkLEcI4m-FBY6d1O3wCdIv-iVwzsR7PHv1P4krrDrywMn1SD1YzwlkJFWWc5BShGkOjSyJa7Hot2hN_yPugYbTuUx2AQUiG-TFlQGCHNuHtaUAKsnfuW9ypPoEtfCbDiBpx3XYbonglbKCSaBPyxtGUuKLMn9-szhYGC5fvEyg=) projects the Turkish economy will grow by 4.2% in 2026, an upward revision attributed to strong domestic demand. [The benchmark interest](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQEd-5GLiPr0vVy7-UL9ZDgRGBZKRdZpIN0iG1bcZrfxUMvCi3eF_wQyAkW1NpXh5w5RNwfYlOf9ikIBRgPMf-iIMu6SMtuFchWLGTnHo3WFy38PHRxRBe4O4U2ox6a_3xNXttQpHbJSrOrh_w==) rate was cut to 37% in January 2026, the lowest since November 2023. [- Venture Capital Landscape](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGnDRXZ-aqtYcHMAMcBTlCIudrvKjOSNWRzxKWmFCdAS9oZzC7uTMzZ0CWvvv7VpiEK5wBN9BDqJJBykpbuuK29k3_6DgMjjmgWOhITCDAWCfZD5j9R2X5087kQbnj4xGK1Gj8ANblvNgGsJpwtSOM1b-BqKVdalkdiG3Oy5wo7RWW6oAOoDR9IxqvUuGQKTGGjIRfdeQ1lFr0u1nhF): In 2025, venture capital investment in Turkish startups saw a significant downturn, raising $589 million across 306 deals, which is a 45% decrease in capital from the previous year. [However, the broader](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHkHYUDuSWNjS3DQJj0kQLkC3eqgXaJW-Gl6x6-shCif0ueK39FK-69pLq8pKBAbRsk5ZS-LJxbLWpMOwxKGLfOERWZVgEScCjkkR62ubzW8dQ_u9D4x482qPxStyqrtoCZYEyx859eMvWUQdT5NL2ncpqLvVv19cuQ3yqpuvqDe2mcz0x0utI8) five-year trend shows a more resilient ecosystem, having attracted $5.6 billion in investments between 2021 and the third quarter of 2025. [- Key Investment Verticals](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGnDRXZ-aqtYcHMAMcBTlCIudrvKjOSNWRzxKWmFCdAS9oZzC7uTMzZ0CWvvv7VpiEK5wBN9BDqJJBykpbuuK29k3_6DgMjjmgWOhITCDAWCfZD5j9R2X5087kQbnj4xGK1Gj8ANblvNgGsJpwtSOM1b-BqKVdalkdiG3Oy5wo7RWW6oAOoDR9IxqvUuGQKTGGjIRfdeQ1lFr0u1nhF): Fintech and gaming were dominant sectors in 2025, capturing 68% of all venture capital deployed. [Artificial intelligence](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGnDRXZ-aqtYcHMAMcBTlCIudrvKjOSNWRzxKWmFCdAS9oZzC7uTMzZ0CWvvv7VpiEK5wBN9BDqJJBykpbuuK29k3_6DgMjjmgWOhITCDAWCfZD5j9R2X5087kQbnj4xGK1Gj8ANblvNgGsJpwtSOM1b-BqKVdalkdiG3Oy5wo7RWW6oAOoDR9IxqvUuGQKTGGjIRfdeQ1lFr0u1nhF) is also a rapidly growing area, with AI-focused startups accounting for a quarter of all investment deals in the same year. [- Startup Ecosystem](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGnDRXZ-aqtYcHMAMcBTlCIudrvKjOSNWRzxKWmFCdAS9oZzC7uTMzZ0CWvvv7VpiEK5wBN9BDqJJBykpbuuK29k3_6DgMjjmgWOhITCDAWCfZD5j9R2X5087kQbnj4xGK1Gj8ANblvNgGsJpwtSOM1b-BqKVdalkdiG3Oy5wo7RWW6oAOoDR9IxqvUuGQKTGGjIRfdeQ1lFr0u1nhF) Maturity: While seed-stage funding remains strong, there is a noticeable weakness in later-stage investments, with no Series C or subsequent rounds recorded in 2025. [This indicates a potential](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGnDRXZ-aqtYcHMAMcBTlCIudrvKjOSNWRzxKWmFCdAS9oZzC7uTMzZ0CWvvv7VpiEK5wBN9BDqJJBykpbuuK29k3_6DgMjjmgWOhITCDAWCfZD5j9R2X5087kQbnj4xGK1Gj8ANblvNgGsJpwtSOM1b-BqKVdalkdiG3Oy5wo7RWW6oAOoDR9IxqvUuGQKTGGjIRfdeQ1lFr0u1nhF) gap in the funding pipeline for scaling companies, leading many to relocate abroad for growth capital. [- Emerging Tech Focus](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQF_AoWVU3lfPCiCgrKu5Yr_ycn8qBisT4-gIeKdFJ4g-UFXQgw8EDYbtYGS3bQBu1hzJMAhOdsqRzPC2_6PI2iPkbHqDs84gDwvwdiiYIHmXWmrUi0EdeRTAAksBV2pplYiojRLbuFf): The government is actively fostering a deeptech and innovation hub, exemplified by the "Terminal Istanbul" project, which aims to host over 2,000 startups. [There's a particular](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHkHYUDuSWNjS3DQJj0kQLkC3eqgXaJW-Gl6x6-shCif0ueK39FK-69pLq8pKBAbRsk5ZS-LJxbLWpMOwxKGLfOERWZVgEScCjkkR62ubzW8dQ_u9D4x482qPxStyqrtoCZYEyx859eMvWUQdT5NL2ncpqLvVv19cuQ3yqpuvqDe2mcz0x0utI8) focus on commercializing university research in fields like AI, biotech, and healthtech, supported by initiatives like the TÜBİTAK BiGG Fund for pre-seed investments. [- Climatetech and Energy](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQFKNOpQODpvAp0uaI8oXSLnlstydSt5NUbI2MHSPI_B6iYz86dSVMEBrUapsEn9PrbK9W-77GIYYnirhaj0AL0W5g8aydqBij2VZNUE8MQ5TDyRL3hwbu4V0egfMdUDi2u_zorKSA7bGkxnf8Ak5JpZkDAA): Climatetech is an emerging area of interest, with startups like Buluttan Weather Intelligence, focusing on climate data analytics, securing seed funding. [The development of electric](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQFkEj2MPqAri2f1fLJ_TtUsDm4nfnR28Ac-mjkefUT_Y6yeXUt8IIbNbabjBgrw5fjNcbHZ3pFZ2FWiYxtHYux7ZB_SxkVp4dPZ2koKLQlGQyTBC1PED1yWICfAMHj8aCzDXfeIOdGZsQsGJM8_ZXPw3z5I1yIXZN38swORSLFVwyPKX4JPm4WxLZjRu3y0NUKCOGKxd_tLaITd_TuQEvsGDEfZST5YmcJrBus=) vehicle infrastructure is also a key area, with companies like Esarj operating charging networks. [- Global Standing and](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHRCy_4PfNxenBzMk6mGoFsabk0YwYuVEBJfgCml9Q96FZXtB8NJqbR9Czxj8nbjn7YmldgOIZd1ayTuNixcNrnIjCCZHQFeJ-ZQXZeMMtu0z9P09j5M9mJcHDrou1aoS0vy-CZBBljJe4Byp2ZzV14TPGsYIiVea-qf3WGjqOU_Wjyl5E24d-5oe5Rre0n1XGoNyr3oaUTBqZ0ig==) Sovereign Risk: Despite domestic challenges, Borsa Istanbul (BIST 100) is considered undervalued, trading at a significant discount compared to the broader emerging markets equity index. [Turkey's 5-year Credit](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHRCy_4PfNxenBzMk6mGoFsabk0YwYuVEBJfgCml9Q96FZXtB8NJqbR9Czxj8nbjn7YmldgOIZd1ayTuNixcNrnIjCCZHQFeJ-ZQXZeMMtu0z9P09j5M9mJcHDrou1aoS0vy-CZBBljJe4Byp2ZzV14TPGsYIiVea-qf3WGjqOU_Wjyl5E24d-5oe5Rre0n1XGoNyr3oaUTBqZ0ig==) Default Swap (CDS) spreads, a measure of sovereign risk, are around 210 basis points, which is higher than the emerging market average of 100. [- Founder and Talent](https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQHkHYUDuSWNjS3DQJj0kQLkC3eqgXaJW-Gl6x6-shCif0ueK39FK-69pLq8pKBAbRsk5ZS-LJxbLWpMOwxKGLfOERWZVgEScCjkkR62ubzW8dQ_u9D4x482qPxStyqrtoCZYEyx859eMvWUQdT5NL2ncpqLvVv19cuQ3yqpuvqDe2mcz0x0utI8) Initiatives:** To attract and retain talent, Turkey has launched the "Tech Visa Program," an initiative for technology professionals and startups with innovative business models. Additionally, there is a notable increase in female entrepreneurship, with the proportion of startups having at least one female co-founder reaching 32.2%.
