Turkish Government Unveils a Medium-Term Economic Program for 2025-2027
The Turkish government has announced a medium-term economic program covering the period from 2025 to 2027 as part of its efforts to tackle the economic crisis. This program comes over a year after adopting a new economic approach led by the team formed by President Recep Tayyip Erdogan following his re-election.
Goals of the New Program
The government emphasized the importance of the new program in reducing inflation to single digits and boosting economic growth.
President Erdogan, in a post on the “X” platform (formerly Twitter), stated that the program aims to:
- Combat inflation.
- Prioritize investment, production, employment, exports, and growth.
He highlighted that the program would strengthen agriculture, industry, advanced technology, and tourism sectors.
Official Statements
In a press conference announcing the program, Turkish Vice President Cevdet Yılmaz said the main goals of the program are:
- Gradually reducing inflation to single-digit levels.
- Enhancing growth potential while curbing inflation.
- Promoting productivity-based investment.
- Improving income distribution and increasing general welfare.
Yılmaz also stressed the importance of coordination between monetary, fiscal, and income policies, with a focus on combating inflation as a top priority.
New Policies and a Different Approach
The program adopts a new strategy led by the economic team, including Finance Minister Mehmet Şimşek, Vice President Cevdet Yılmaz, and Central Bank Governor Hafize Gaye Erkan.
Among the major changes introduced by this team is abandoning the unconventional low-interest-rate policy in favor of tightening monetary policy. As a result, the main interest rate rose from 8.5% to 50% through successive hikes.
Key Differences Between New and Previous Projections
- GDP Growth
- New projections: 3.5% in 2024, 4% in 2025, 4.5% in 2026, and 5% in 2027.
- Previous projections: 4% in 2024, 4.5% in 2025, and 5% in 2026.
- Inflation
- New projections: Annual inflation to drop to 41.5% by the end of 2024, 17.5% in 2025, 9.7% in 2026, and 7% in 2027.
- Previous projections: Inflation to decrease to 33% by the end of 2024, 15.2% in 2025, and 8.55% in 2026.
- Unemployment Rates
- New projections: Unemployment to decrease to 9.3% in 2024, 9.6% in 2025, 9.2% in 2026, and 8.8% in 2027.
- Previous projections: 10.3% in 2024, 9.9% in 2025, and 9.3% in 2026.
- Lira vs. Dollar
- New projections: Lira to stabilize at 33.2 per dollar in 2024, 42 in 2025, 44.4 in 2026, and 46.9 in 2027.
- Previous projections: 36.8 per dollar in 2024, 43.9 in 2025, and 47.8 in 2026.
Economists’ Comments
- Hakan Kara (former chief economist at the Central Bank): Raising the inflation target to 17.5% in 2025 is more reasonable but still unrealistic.
- Oguz Demir (economist): The proposed targets are overly optimistic and could lead to a social crisis.
- Serkan Ozcan (economist): Achieving the declared inflation levels seems extremely difficult, even with prolonged strict policies such as wage suppression and credit restrictions.
Conclusion
The medium-term economic program represents an ambitious plan to balance inflation control and economic growth. However, optimistic projections and implementation challenges may pose obstacles to achieving the announced goals.
If you enjoyed the article, feel free to share it with your friends. For assistance in real estate investment, you can contact me for tailored advice.
The Turkish government has announced a medium-term economic program covering the period from 2025 to 2027 as part of its efforts to tackle the economic crisis. This program comes over a year after adopting a new economic approach led by the team formed by President Recep Tayyip Erdoğan following his re-election.
Goals of the New Program
The government emphasized the importance of the new program in reducing inflation to single digits and boosting economic growth.
President Erdoğan, in a post on the “X” platform (formerly Twitter), stated that the program aims to:
- Combat inflation.
- Prioritize investment, production, employment, exports, and growth.
He highlighted that the program would strengthen agriculture, industry, advanced technology, and tourism sectors.
Official Statements
In a press conference announcing the program, Turkish Vice President Cevdet Yılmaz said the main goals of the program are:
- Gradually reducing inflation to single-digit levels.
- Enhancing growth potential while curbing inflation.
- Promoting productivity-based investment.
- Improving income distribution and increasing general welfare.
Yılmaz also stressed the importance of coordination between monetary, fiscal, and income policies, with a focus on combating inflation as a top priority.
New Policies and a Different Approach
The program adopts a new strategy led by the economic team, including Finance Minister Mehmet Şimşek, Vice President Cevdet Yılmaz, and Central Bank Governor Hafize Gaye Erkan.
Among the major changes introduced by this team is abandoning the unconventional low-interest-rate policy in favor of tightening monetary policy. As a result, the main interest rate rose from 8.5% to 50% through successive hikes.
Key Differences Between New and Previous Projections
- GDP Growth
- New projections: 3.5% in 2024, 4% in 2025, 4.5% in 2026, and 5% in 2027.
- Previous projections: 4% in 2024, 4.5% in 2025, and 5% in 2026.
- Inflation
- New projections: Annual inflation to drop to 41.5% by the end of 2024, 17.5% in 2025, 9.7% in 2026, and 7% in 2027.
- Previous projections: Inflation to decrease to 33% by the end of 2024, 15.2% in 2025, and 8.55% in 2026.
- Unemployment Rates
- New projections: Unemployment to decrease to 9.3% in 2024, 9.6% in 2025, 9.2% in 2026, and 8.8% in 2027.
- Previous projections: 10.3% in 2024, 9.9% in 2025, and 9.3% in 2026.
- Lira vs. Dollar
- New projections: Lira to stabilize at 33.2 per dollar in 2024, 42 in 2025, 44.4 in 2026, and 46.9 in 2027.
- Previous projections: 36.8 per dollar in 2024, 43.9 in 2025, and 47.8 in 2026.
Economists’ Comments
- Hakan Kara (former chief economist at the Central Bank): Raising the inflation target to 17.5% in 2025 is more reasonable but still unrealistic.
- Oguz Demir (economist): The proposed targets are overly optimistic and could lead to a social crisis.
- Serkan Ozcan (economist): Achieving the declared inflation levels seems extremely difficult, even with prolonged strict policies such as wage suppression and credit restrictions.
Conclusion
The medium-term economic program represents an ambitious plan to balance inflation control and economic growth. However, optimistic projections and implementation challenges may pose obstacles to achieving the announced goals.
If you enjoyed the article, feel free to share it with your friends. For assistance in real estate investment, you can contact me for tailored advice.
