The Central Bank of the Republic of Turkey (CBRT) has released its first Inflation Report of 2025, revising its inflation forecast from 21% to 24%. Beyond this expected adjustment, the report reveals significant hidden wealth held outside the formal financial system. In times of economic uncertainty, Turkish citizens have long favored alternative savings most notably gold and real estate. The report estimates households’ financial assets at $505 billion, while rental real estate is valued at $701 billion. Even more striking is the $311 billion in gold savings kept off the formal books.
Historically, gold has been a safe-haven and a hedge against inflation in Turkey. The CBRT calculated these gold reserves by analyzing import, export, and production data, showing a steady rise through the third quarter of 2024. Although individual investors use gold to shield themselves from economic volatility, its exclusion from the financial system means that a substantial pool of capital remains idle capital that could otherwise drive investment, credit expansion, and overall economic growth. This hidden wealth, therefore, undermines the effectiveness of monetary policy and complicates efforts to control inflation and stabilize the economy.
The report also underscores the dominance of real estate investments, particularly in the rental market. With rental property values now at $701 billion, the continual rise in housing prices further entrenches real estate as a primary means of wealth preservation. Unlike financial assets, real estate remains largely detached from direct monetary controls, keeping a significant share of wealth outside conventional investment channels and limiting policymakers’ ability to influence capital flows.
Although asset valuation effects have weakened since mid-2024 suggesting easing inflationary pressures the persistent accumulation of wealth in gold and real estate poses a long-term challenge. Unless household preferences shift toward financial instruments, this hidden economy may continue to hinder Turkey’s disinflation process and complicate economic stabilization. Integrating these assets into the formal financial system is essential for ensuring that Turkey's vast wealth actively supports sustainable economic growth rather than merely serving as a personal store of value.
