Turkey sees single-digit inflation by 2026 in economic programme
Turkey aims to raise growth potential alongside disinflation
Yilmaz stresses strong coordination of monetary, fiscal policies
Annual inflation seen at 41.5% this year, 17.5% in 2025
GDP growth forecast to be 3.5% in 2024, 4.0% next year
Adds quotes, further forecasts, lira, background
By Nevzat Devranoglu and Huseyin Hayatsever
ANKARA, Sept 5 (Reuters) -Turkey aims to achieve single-digit inflation by 2026 and raise economic growth to 5% by 2027, Vice President Cevdet Yilmaz said on Thursday as he unveiled the government's three-year economic policy roadmap.
The programme is seen by some analysts as a test of Turkey's commitment to its disinflation drive after the central bank raised its main interest rate sharply to 50% this year, and Yilmaz stressed that disinflation was a fundamental goal.
"The main objective of the 2025-2027 programme is to gradually reduce inflation to single-digit levels and increase our growth potential in line with the disinflation process," he said in a presentation at the presidential palace.
The programme forecast that annual inflation will fall to 41.5% in 2024 and 17.5% next year before reaching 9.7% in 2026. Inflation dipped below 52% last month, continuing a slide due to base effects and tight policies from a peak of 75% in May.
Gross domestic product growth was seen at 3.5% in 2024 and 4% in 2025, rising to 5% by 2027, the plan showed. Economic growth dipped to 2.5% in the second quarter.
Central Bank Deputy Governor Hatice Karahan told Reuters this week that Turkey's fiscal policy will be critical to ensure that inflation remains on its downward path now that aggressive interest rate hikes are beginning to yield results.
Karahan is one of the key architects of Turkey's dramatic U-turn toward a more orthodox central bank policy, which aims to leave behind years of monetary stimulus under Erdogan that sent inflation soaring and set off a series of currency crashes.
The lira TRYTOM=D3 was little changed at 33.99 against the dollar on Thursday. It hit a record low of 34.55 last month.
"STRONG COORDINATION"
Yilmaz said the programme aimed to increase productivity-based investment, employment, production and exports through structural reforms.
"Strong coordination of monetary, fiscal and income policies will be ensured and the fight against inflation will be addressed as a priority area," he added.
The programme anticipated a strong surge in tourism revenues to $74.1 billion by 2027 from $55.9 billion this year. Exports were seen climbing to $319.6 billion by 2027 from $255.6 billion this year.
The unemployment rate was seen at 9.3% in 2024 and 9.6% in 2025, Yilmaz said, adding that the current account-to-GDP ratio was forecast to be 1.7% in 2024 and 2% in 2025.
The government's inflation forecast was higher than that of the central bank, which forecast in its latest inflation report that inflation would be 38% at the end of this year and 14% next.
The central bank has pledged to remain vigilant to inflation risks after its last policy tightening to 50% in March, an increase of 4,150 basis points since June 2023.
Reporting by Nevzat Devranoglu, Huseyin Hayatsever, Ece Toksabay, Tuvan Gumrukcu;
Writing by Daren Butler;
Editing by Miral Fahmy
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