New forecast from the IMF for the Turkish economy: What is the inflation expectation?

In its October 2026 European Regional Economic Outlook report, the International Monetary Fund (IMF) stated that the European economy continued to grow despite successive shocks, but the growth rate remained low. The report emphasized that high energy prices, geopolitical risks, tariffs, drought and rising bond interest rates pressure the economic outlook.

The IMF expects the Turkish economy to grow by 2.7 percent in 2026, 3.6 percent in 2027 and 4 percent in 2028. Inflation forecasts for Türkiye have been revised upwards compared to previous forecasts.

GROWTH FORECAST HAS BEEN REDUCED IN TURKEY

The IMF reduced Turkey's 2026 growth forecast by 0.7 points to 2.7 percent compared to its prediction in April. The fund increased its 2027 growth forecast by 0.1 points to 3.6 percent, and its 2028 forecast by 0.2 points to 4 percent.

Annual inflation in Turkey is expected to be 31.2 percent in 2026, 26.5 percent in 2027 and 20.6 percent in 2028. The IMF revised its inflation forecasts upward by 2.6 points for 2026, 5.1 points for 2027 and 3.6 points for 2028.

INFLATION PRESSURE WILL CONTINUE IN EUROPE

According to IMF forecasts, annual inflation across Europe is expected to be 5.8 percent in 2026, 5.1 percent in 2027 and 4.1 percent in 2028. In the Eurozone, inflation is expected to remain at 3.1 percent, 2.8 percent and 2.2 percent, respectively, in the same years.

Although oil prices remain below the peaks seen during the war, it was stated that the high prices of natural gas and refined petroleum products may keep inflation above the targets for a while.

The IMF pointed out that strong wage increases and loose fiscal policies in some countries may make it difficult to fight inflation. The report stated that monetary policy should be tightened further when necessary and expansionary fiscal policies should be avoided.

GERMANY'S FORECAST WAS INCREASED, FRANCE'S IS REDUCED

While the IMF increased Germany's growth forecast for 2026 from 0.8 percent to 1.3 percent, it reduced its forecast for France from 0.9 percent to 0.4 percent.

According to the fund's forecasts, the Spanish economy is expected to grow by 2.5 percent, Italy by 0.8 percent and the United Kingdom by 1.3 percent. While Romania's growth forecast was reduced from 0.7 percent to minus 0.5 percent, 0.9 percent growth was predicted for Russia and 1 percent growth for Ukraine.

REFORM CALL FROM IMF TO EUROPE

The IMF emphasized that innovation should be encouraged, the European Union single market completed and barriers in product markets removed to strengthen the resilience of European economies. The report also highlighted the importance of freer movement of capital and labor.