Impact of Wars on Turkey's Inflation Nears 7 Percentage Points
Central Bank Governor Fatih Karahan stated that global conflicts have brought a burden of nearly 7 percentage points to inflation growth in Turkey, with effects spreading across a wide range of sectors.
CBRT Governor Fatih Karahan announced that wars have had an impact of nearly 7 percentage points on inflation in the Turkish economy this year, and this pressure has not remained limited to energy but has spread to many sectors.
Impact on Inflation and Sectoral Spread
CBRT Governor Fatih Karahan stated that the impact of wars on inflation in Turkey has approached 7 percentage points this year.
It was stated that this impact does not stem solely from energy prices; rather, it has spread to the economy through transportation, food, fertilizer, petrochemicals, and durable consumer goods.
Medium-Term Program and Targets
Following the announcement of the Medium-Term Program covering the 2027-2029 period, upward revisions in inflation targets drew attention.
While the year-end 2026 inflation expectation in the program was set at 28.4 percent, inflation is targeted to fall back to single digits by 2029.
Economic Growth Expectations
The Turkish economy is projected to record a growth rate of 3.3 percent in 2026.
The growth rate is expected to reach 4.2 percent in 2027, 4.6 percent in 2028, and 5 percent in 2029.
Reasons for Revision and Global Shocks
It was explained that the primary reason for the upward revision in inflation targets was the price increases that remained above targets in the previous period.
The second and more striking reason was stated to be global supply shocks and wars.
Disinflation Process and Future Outlook
Karahan argued that the change in forecasts should not be interpreted as abandoning the disinflation outlook.
It was reiterated that the main reason for the deviation in the 2026 target is that the war has become heavier and more protracted than expected.