Economic targets and inflation effects of the new Medium-Term Program
The details of the new Medium-Term Program covering the 2027-2029 period were evaluated. It was stated that growth policy was preserved while inflation targets were postponed.
Koç University faculty member Prof. Dr. Selva Demiralp evaluated the new Medium-Term Program covering the 2027-2029 period through the lens of monetary policy. It drew attention that while inflation targets were postponed upwards in the program, growth rates were preserved as a political choice.
Growth and Inflation Preferences in the MTP
In the new Medium-Term Program covering the years 2027-2029, the inflation path was shifted upwards and the date for dropping to single digits was postponed by two years. The fact that growth rates were lowered by a maximum of 0.5 points showed that growth is an untouchable preference of politics.
Growth and Employment Targets
The growth forecasts for 2027 and 2028 in the old program were adjusted to 4.2 percent and 4.6 percent, respectively, in the new period, while the 2026 forecast stands at 3.3 percent. The unemployment target was set at 8.1 percent for 2026, and it was observed that the ruling power did not compromise on employment due to the election calendar.
Global Conditions and the Disinflation Process
Among the main reasons for the slight deviation in growth are weak external demand, slowdown in global trade, and tight financial conditions. Achieving strong disinflation without sacrificing growth requires high capital inflows or high central bank credibility.
Current Account Deficit and Exchange Rate Expectations
In the new program, it is observed that the current account deficit expands, reaching 47.5 billion dollars in 2026. Additionally, the upward revision of the implicit Dollar/TL exchange rate path starting from 2027 signals that the overvalued Turkish Lira policy will be abandoned.