Top officials are set to unveil Türkiye’s updated economic forecasts on Thursday, outlining the country’s road map for the next three years, Vice President Cevdet Yılmaz said late Monday.
First unveiled last September, the medium-term program (MTP) is centered around structural reforms, reining in stubborn inflation while eventually ensuring sustainable growth.
Yılmaz will make a presentation about the government’s 2025-2027 projections related to a range of indicators, primarily inflation, trade, budget and structural reforms.
“We will share a realistic and consistent program that enhances predictability with our society and relevant stakeholders,” he told an interview with public broadcaster TRT Haber.
He stressed the ground covered in the fight against inflation, which remains one of Türkiye’s biggest challenges.
Still, price pressures have been cooling over the last three months.
Annual inflation tumbled to 51.97% in August, official data showed on Tuesday, continuing a sharp slide due to base effects and food price relief, and keeping the central bank on track for rate cuts in the months ahead.
The decline began after the annual consumer price index (CPI) touched 75% in May, the highest level since late-2022, as a more than year-long monetary tightening campaign started to bring price relief.
Yılmaz said the inflation rate is expected to decline to the 40s in September.
The government and the central bank see inflation ending the year at around 38%.
“Our goal for next year is to see inflation below 20%, and by 2026, we aim to bring our country back to single-digit figures. We have structured our entire plan and program accordingly,” Yılmaz noted.
The updated MTP will “aim to break the inertia of inflation through policies that will enhance the efficiency of goods and services markets and increase competition,” he wrote on X on Tuesday after the release of inflation data.
“By improving long-term expectations, we intend to ease the cost of disinflation on the real economy.”
The Central Bank of the Republic of Türkiye (CBRT) has hiked its benchmark one-week repo rate by 4,150 basis points since June last year to 50% and vowed to tighten further in the case of a significant deterioration in inflation.
Increases in interest rates, over time, raise borrowing costs for a range of consumer and business loans, including mortgages, auto loans and credit cards.
On Monday, Yılmaz also noted that exports continue to increase despite challenging global conditions, while imports are on a downward trend, which is improving the external balance, reducing the trade deficit, and contributing to a decrease in the current account deficit.
He highlighted that performance in both goods and services trade has surpassed program expectations. He noted that last year’s MTP estimated the current account deficit for this year would be slightly above 3%, but recent figures suggest it will fall below 2%.
“When your current account deficit decreases, your need for foreign currency diminishes, as does your need for external borrowing. This reduces pressure on foreign exchange markets. You can achieve much more stable growth using your own resources and savings, creating a more competitive economic structure,” he told TRT Haber.
“The current account deficit is one of the most critical bottlenecks in our development. We have reached a very good point now, but it is also crucial to make this sustainable.”
The year-long monetary tightening campaign has helped the central bank rebuild its foreign exchange reserves, which Yılmaz said reached around $150 billion. That compared to $98.5 billion in May-June last year.
Yılmaz recalled that the previous MTP forecasted an unemployment rate of 10.3% for 2024 but noted that the current level is much lower than anticipated.
He projected that the unemployment rate would end the year in single digits.
Yılmaz also stated that due to controlled spending and revenue-enhancing measures, the budget deficit would be kept below 5%. He added that the exact figure would be disclosed on Thursday.
