IMF's year-end dollar forecast revealed: It rose by 5 liras
The IMF's latest economic report does not align with the targets announced in Turkey's Medium-Term Program. According to the IMF, growth in 2025 will be 2.7 percent, not 4 percent, and inflation will not fall from double digits. The IMF also provided a year-end dollar exchange rate forecast. Here are the details...
12punto
The International Monetary Fund (IMF) updated Turkey's growth, inflation, and exchange rate projections in its April 2025 World Economic Outlook report. The report contains significant inconsistencies with the Medium-Term Program (OVP) announced by Turkey.
According to the IMF, the 4 percent growth rate projected by the government in the OVP for 2025 will only be 2.7 percent. This forecast points to a more pessimistic picture compared to the IMF's October 2024 report.
DOLLAR FORECAST ROSE BY 5 LIRA AT ONCE
According to the IMF's two reports from different dates, there has been a sharp increase in dollar/TL exchange rate forecasts. The average exchange rate expectation for 2024 increased by 1.5 lira to 41.8 TL, and for 2025, it rose by approximately 5 lira to 45.2 TL.
Economist Mahfi Eğilmez, analyzing the IMF's TL and dollar-based data, stated that this rise in the exchange rate shows that foreign exchange pressures continue and that economic programs are moving away from being realistic.
7-POINT REVISION IN INFLATION
The IMF's most striking revision was in its inflation forecast. The institution increased its 2025 inflation expectation by 7 points at once, raising it to 31 percent.
This rate is nearly double the 17.5 percent target included by the government in the OVP. The 24 percent forecast announced by the Central Bank of the Republic of Turkey (TCMB) for 2025 also remained behind the IMF's forecast.
DOUBLE-DIGIT INFLATION FOR 5 MORE YEARS
According to the IMF report, the Turkish economy will not be able to reach the "single-digit inflation" targets envisioned by the government for 2026 and the TCMB for 2027. The institution predicts that Turkey will continue its path with double-digit inflation for at least 5 years.
CRAWLING PEG OFFICIALLY RECOGNIZED
Turkey's exchange rate policy was also officially classified by the IMF as a "crawl-like arrangement."
Treasury and Finance Minister Mehmet Şimşek's statement this week that "Conditions require a process where the TCMB manages the exchange rate significantly" supported this classification in the IMF report.
In the IMF's 2023 Exchange Rate Policy Changes report, Turkey was included among countries that have "moved away from a free-floating exchange rate regime to a controlled-increase exchange rate" policy, alongside Jamaica and Zambia.
Economist Mahfi Eğilmez stated that current macroeconomic indicators are moving away from OVP targets and that the program has become detached from reality. According to Eğilmez, the OVP needs to be updated every three months, not once a year.