Türkiye's 2027-2029 Medium Term Program Announced

Basic economic aggregates and targets were determined with the Medium Term Program (MTP), which includes the 3-year targets and policies of the Turkish economy. Vice President Cevdet Yılmaz announced the MTP covering the 2027-2029 period at the meeting held with the participation of Treasury and Finance Minister Mehmet Şimşek and Central Bank Governor Fatih Karahan. Drawing attention to the pressures on energy and commodity prices resulting from the war in the region, Yılmaz said, "We updated our growth forecast for 2026 to 3.3 percent. While our industrial growth forecast decreased to 2.3 percent, our end-of-year inflation forecast increased to 28.4 percent. We also updated our forecast for the ratio of the current account deficit to national income to 2.6 percent. Our tourism revenue forecast was revised from 68 billion dollars to 65 billion dollars, again due to the effect of the war."

Reminding that the exit from the Currency Protected Deposit (KKM) was completed without any problems, Yılmaz said, "Our gross reserves increased by 89.7 billion dollars, reaching 188.2 billion dollars. Despite the geopolitical tensions, our risk premium decreased from 700 levels to below 220 levels."

Stating that they have made significant progress in the fight against inflation, Yılmaz said, "We expect inflation to decrease again in the last quarter of 2026 and to be 28.4 percent at the end of the year. We aim for inflation to decrease to 21 percent in 2027, to 13.5 percent in 2028 and to 9 percent in 2029, falling to single-digit levels again at the end of the program period. We expect it to be 3.3 percent in 2026." We expect growth to gradually strengthen, reaching 4.2 percent in 2027, 4.6 percent in 2028 and 5 percent in 2029. We expect the unemployment rate to decrease to 8.1 percent in 2026, to 8 percent in 2027, to 7.8 percent in 2028 and to 7.6 percent in 2029. "We aim," he said.

Yılmaz said that they foresee the current account deficit to decrease to 1.9 percent in 2027, 1.8 percent in 2028 and 1.6 percent in 2029 as the impact of the war in the region decreases. Yılmaz stated that the inertia brought by the high inflation from the past was effective in Turkey being affected by inflation more than other countries due to the war, and said, "The external conjuncture did not support us at all, we always encountered negative surprises. Wars, some other developments... If it were not for the effect of this war alone, we would be talking about 25 percent inflation today, not 31.5 percent."

While Central Bank President Fatih Karahan drew attention to the inflation of the war, he noted that they did not foresee any revision that would cause pessimism. Karahan said, "We see that inflation data is positive, especially in demand-based areas. We can see this in basic goods."

Explaining that they expect the national income per capita to reach 25 thousand dollars, Yılmaz said, "We will implement supply-side policies more strongly in food prices." Stating that they will increase social security premium income and make the system compatible with new generation flexible working models, Yılmaz said, "We have to reduce our foreign dependency in energy, defense industry, high technology and mines that are critical for the future of our industry. We are increasing Mineral Research and Exploration investments by 139 percent. We are increasing industrial infrastructure investments by 54 percent. We are increasing defense expenditures by 229 percent. We are increasing social housing investments by 150 percent. We are expanding our rental social housing projects, which we started in Istanbul, throughout the country." "We plan to spread it," he said. Yılmaz stated that they foresee 2.1 million employment during the program period and said, "A new and comprehensive program that we call 'Youth's Production Age' is on our agenda."

Minister of Treasury and Finance Mehmet Şimşek stated that success has been achieved in public savings; Stating that savings were made in areas such as public vehicles, buildings, communication-travel expenses, energy, water, stationery and fixtures, he said, "In the 10 years before the Savings Circular, the share of these items in budget expenditures was 4.6 percent. Today, this share is 2.9 percent as of the end of 2025. This saving corresponds to 484 billion liras. This actually corresponds to a larger savings than the budget of 6 ministries. Rental rental contracts whose contracts have expired are 2.9 percent." "We reduced the number of rental vehicles by 21 percent during the vehicle renewal process," he said.

Giving information about the fight against informality, Şimşek said, "We audit 31 out of every 100 large companies. This was around 11 percent in 2024. We increased it from 3.6 percent to 7.3 percent in medium-sized companies." Şimşek said, "Inflation could have gotten out of control, let alone falling, in such a difficult conjuncture, but it did not. We are not at the point we desired, of course, our targets were ambitious in the beginning. In this difficult conjuncture, inflation has the effects of external conditions, as well as the earthquake, KKM and EYT, especially in 2023. In such a difficult conjuncture, it was important that inflation did not get out of control."

Regulations envisaged in the MTP:

■ Standard retirement investment funds in BES will be redesigned to produce more added value for participants' savings.

■ Increasing the interaction of defense industry technologies with applications in the civilian field and benefiting from domestic defense industry capabilities in technology-intensive civilian procurements will be encouraged. Training and professional development programs for the competencies needed by the defense industry will be expanded.

■ Investor Risk Center will be established for the purpose of detecting systemic risks in capital markets and providing early warning.

■ Digital resolution platforms, online dispute and electronic hearing methods will be developed for the right to trial within a reasonable time. Specialized courts will be created in new areas of need.

■ Market Surveillance and Inspection Authority will be established to consolidate market control activities.

■ The construction of social housing for low-income people, the disabled and newly married young people will be accelerated, and social housing for rent will be expanded.

Business world representatives evaluated the MTP. MÜSİAD Chairman Burhan Özdemir said, "We believe that we can move up to higher levels in global value chains by combining our strong industrial infrastructure with higher technology, higher export unit value and more domestic added value." TÜGİAD President Gürkan Yıldırım said, "We find it important to aim to reduce inflation to single digits and increase growth to 5% in order for our economy to reach a stronger and sustainable growth path again."

Drawing attention to the increase in school fees, Şimşek stated that despite the restrictions, especially private universities continue to increase exorbitant prices and said, "Education inflation was 92 percent in 2024, 66 percent in 2025 and 53 percent this year. There is a serious break from the headline here. It must be evaluated whether the rules are followed by the relevant institution or not. We do not see any grounds that would justify such extreme, high increases in education inflation. Very "It is clear that there are exorbitant price increases. While the headline inflation is 31.5 percent, if the education inflation is over 53 percent in total, there is a problem here," he said.