Türkiye's government has lowered its 2026 economic growth forecast and pushed back its disinflation timeline in a new three-year economic roadmap, citing the impact of the regional war on energy prices and inflation.
Vice President Cevdet Yılmaz presented the Medium-Term Program (known in Türkiye by its acronym OVP) for 2027-2029 on September 6 at the Presidential Complex in Ankara. The plan was approved by President Recep Tayyip Erdoğan and took effect upon publication in the Official Gazette. The OVP is the government's main macroeconomic framework and anchors the annual budget.
Inflation path
The program expects annual consumer inflation to resume its decline in the final quarter of 2026 and end the year at 28.4%. It then targets 21% in 2027, 13.5% in 2028 and 9% in 2029, which would be the first single-digit reading in years. Yılmaz recalled that inflation peaked at 75.5% in May 2024. According to the program, the central bank estimates the war's direct and indirect effect on inflation at about 7 percentage points.
Central Bank Governor Fatih Karahan said he saw no revision that would justify pessimism about inflation, pointing to favorable data in areas relevant to monetary policy.
Growth, energy and the external balance
The 2026 growth forecast was cut to 3.3% from 3.8%. Growth is then projected at 4.2% in 2027, 4.6% in 2028 and 5% in 2029. The government expects national income to exceed $1.8 trillion by the end of 2028 and per capita income to pass $20,000, with targets of more than $2.2 trillion and $25,000 by the end of the program period, alongside goods and services exports of $450 billion.
Higher energy costs weigh on the external outlook. The 2026 energy import bill forecast was raised to $71 billion from $63 billion, while expected tourism revenue was trimmed to $65 billion from $68 billion. As a result, the current account deficit is now seen at 2.6% of GDP at the end of 2026, double the previous 1.3% estimate, before easing to 1.9% in 2027, 1.8% in 2028 and 1.6% in 2029.
On the fiscal side, the 2026 budget deficit is expected at 3.1% of GDP, better than the earlier 3.5% forecast, with a target of 2.8% by the end of the period. Treasury and Finance Minister Mehmet Şimşek stressed reducing current account vulnerabilities and said public spending would rise with planned appropriations, rejecting claims that savings come from cutting investment.
Sources
Photo: OSCE Parliamentary Assembly / CC BY-SA 2.0, via Wikimedia Commons
