Bleak economic outlook: Inflation to exceed government forecasts in 2025 and 2026

According to the results of a survey conducted by Reuters between October 14-22 with the participation of 37 economists, inflation in Turkey is expected to exceed the levels estimated by the government in 2025 and 2026.

According to the survey, year-end inflation will fall to 31.3 percent this year and to 23 percent by the end of 2026. In contrast, the government had forecast inflation at 28.5 percent for the end of 2025 and 16 percent for the end of 2026.

The Central Bank of the Republic of Turkey (TCMB) had set a target of 16 percent for 2026 and 9 percent for 2027.

EXPECTATIONS OF "SLOW EASING" FROM THE CENTRAL BANK

Economists expect the Central Bank to slow the pace of interest rate cuts at this week's Monetary Policy Committee (PPK) meeting.

Survey participants anticipate the policy rate will be cut from 40.5 percent to 39.5 percent. Furthermore, the main interest rate is estimated to be 37.5 percent by the end of the year and 27 percent by the end of 2026.

GROWTH FORECASTS LAG BEHIND GOVERNMENT PROGRAM

According to the survey, GDP growth is expected to be 3.3 percent this year, 3.4 percent in 2026, and 3.8 percent in 2027.

The government's three-year program includes growth targets of 3.3 percent for 2024, 3.8 percent for 2025, and 4.3 percent for 2027.

LIMITED CHANGE EXPECTED IN CURRENT ACCOUNT DEFICIT

Economists participating in the survey project that the ratio of the current account deficit to GDP will be 1.3 percent this year, and 1.6 percent in 2026 and 2027.

News Source: 12punto