Turkish gov’t raises 2024 year-end inflation target to 41.5 from 33 pct

Duvar English

Turkish Vice President Cevdet Yılmaz on Sept. 5 announced the Medium Term Program (MTP) covering the 2025-2027 period and stated that inflation targets for all years have been raised.

In the press release, Yılmaz stated that the 2024 inflation target was revised from 33 percent to 41.5 percent. The 2025 inflation target, previously set at 15.2 percent, was raised to 17.5 percent. For 2026, the target was increased from 8.5 percent to 9.7 percent. 

The growth forecast for 2024 was reduced from four percent to 3.5 percent. The 2025 forecast, previously set at 4.5 percent, was also lowered to four percent. The growth rate for 2026 was decreased by 0.5 points to 4.5 percent, while the target for 2027 was set at five percent. 

Thus, all growth rate forecasts in the previous program were lowered by 0.5 points.

“The MTP includes the macroeconomic policy framework and targets for the three-year period, priority reform areas and timetable. In the last year, the projections and targets in key macroeconomic indicators have been realized to a significant extent, and current forecasts remain largely valid,” Yılmaz said during the press conference at the presidential complex.

The vice president stated that the contribution of domestic demand to growth has decreased, while the current account deficit has fallen below the government’s expectations in line with it’s “balanced growth policy.” 

In June, current account recorded net surplus of 407 million dollars.

Yılmaz said that the employment growth exceeded the government’s targets as well. Turkey's unemployment rate rose to 9.2 per cent in June, while youth unemployment rose to 17.6 per cent, according to official data.

VP Yılmaz noted, “We can see that the transition period has been completed and the disinflation period has started. August data show that the disinflation process has started to be effective, and we expect this trend to continue in September and beyond. Confidence in Turkish has increased significantly during the last year. The share of lira deposits in total deposits recorded a significant increase.”

Turkey's official statistics institution reported a monthly inflation rate of 3.23 percent in August, with the annual inflation rate decreasing to 51.97 percent. However, the independent research group ENAG calculated a higher monthly inflation rate of 3.47 percent, with a 12-month increase of 90.35 percent.

“The main objective of our program is to gradually reduce inflation to single digit levels,” Yılmaz said in his presentation on the new MTP.

The updated MTP estimated the average dollar exchange rate at 33.2 liras for 2024, 42 liras for 2025, 44.4 liras for 2026, and 46.9 liras for 2027. In the previous program, the projected rates were higher with 36.78 liras for 2024, 43.93 liras for 2025, and 47.79 liras for 2026.

The last version of the MTP was released on September 2023.