New Medium-Term Program announced: The roadmap for the economy

The 3-year roadmap for the Turkish economy has been announced. While the growth forecast for 2024 was revised down from 4 percent to 3.5 percent, the inflation forecast for this year was raised from 33 percent to 41.5 percent. The current account deficit for this year was lowered from 3.1 percent to 1.7 percent.

Vice President Cevdet Yılmaz, who made statements regarding the matter, said the following:

"We have gathered today to share with you the policy framework, targets, and implementation tools regarding the OVP, which will shape the next 3 years of the Turkish economy. We will set out the roadmap we will follow in critical areas such as our economy's growth, employment outlook, and financial and price stability.

I wish the new OVP period to be beneficial to our country. The OVP, which is a fundamental policy document prepared with a 3-year perspective, is prepared by our Strategy and Budget Directorate and the Ministry of Treasury and Finance and is made official with the signature of our President. The purpose of the program is to address basic economic aggregates, revenue and expenditure estimates, budget balance, and borrowing status. It includes the appropriation ceilings for public administrations.

'WE ARE IN A PERIOD WHERE UNCERTAINTIES HAVE DISAPPEARED'

With the general elections held last year, political uncertainties in our country have disappeared, and we have entered a long period without elections. With the economic program we implemented immediately after the elections, we have eliminated policy uncertainties. We are in a period where uncertainties have disappeared and predictability has strengthened.

With the updated OVP, we will continue to implement policies that will ensure our country's development and increase its prosperity in a determined manner.

During our OVP preparation process, we held comprehensive consultation meetings with different stakeholders. We aimed to create a more inclusive policy set by taking into account their views and suggestions.

In this process, the meetings we held with unions, professional organizations, business world representatives, agricultural sector representatives, tradesmen representatives, and non-governmental organizations contributed greatly to our understanding of the needs of various segments of our society.

PUBLISHED IN THE OFFICIAL GAZETTE

Preparations for the OVP covering the 2025-2027 period were planned and progressed step by step. In the process that started in June, budget negotiations with public institutions were initiated, and policy and measure proposals were collected from the relevant institutions.

Towards the end of August, the OVP draft was finalized and presented to the relevant institutions. Finally, with the approval of our President, the OVP has been published in the Official Gazette today and has gained official status.

We want to take stock of the 1-year period that has passed since the last OVP. When we evaluate the last 1 year within the framework of the OVP we implemented last September, the forecasts in the basic macroeconomic indicators have largely materialized, and the current estimates remain valid. This demonstrates the predictability of our program. The effects of the disinflation process have begun as of June 2024. A 23.5-point decrease has been recorded in the inflation rate.

In the field of employment, despite the rebalancing trend in economic activity, unemployment rates have shown improvement beyond our targets. As the effectiveness and efficiency in public expenditures increased, the budget deficit followed a more positive course than our estimates. This has contributed to the sustainability of public finance.

'OUR ECONOMY GREW BY 5.1 PERCENT LAST YEAR'

Our program is working successfully and producing results. Despite the global and regional challenges experienced throughout 2003, the Turkish economy showed stable growth. Despite the earthquake disaster and the environment of negative global developments, our economy grew by 5.1 percent last year, continuing its uninterrupted growth process.

The contribution of domestic demand to growth has decreased significantly compared to 2023, while net exports of goods and services have made a positive contribution to growth. In 2023, the industrial sector was affected more by global tightening policies and grew slower than the national income growth.

1 MILLION 105 THOUSAND ADDITIONAL JOBS IN THE LAST 1 YEAR

We can see that the transition period has been completed in this program year and the disinflation period has begun. As of August 2024, the cumulative CPI increase rate has declined compared to the same period of the previous year and was recorded at 52 percent. We expect this trend to continue in September.

We see that unemployment rates have declined significantly. Employment, which was 31 million 556 thousand in the 2nd quarter of 2023, reached 23 million 661 thousand people in the 2nd quarter of 2024. In the last 1 year, 1 million 105 thousand additional employment opportunities have been created.