Turkey revises inflation outlook upward

Turkey has unveiled its new medium-term economic program for 2027-2029, significantly revising its inflation outlook upward due to the impact of the Middle East conflict. Vice President Cevdet Yilmaz announced on Sunday that the government now forecasts year-end inflation to reach 28.4 percent for 2026, a substantial increase from previous projections. The revised forecast acknowledges the ongoing challenges in controlling price growth. Inflation has remained above 30 percent since December 2021, peaking at over 75 percent in May 2024. While annual inflation eased to 31.5 percent in August from 31.75 percent in July, officials stated that the war in the Middle East has directly and indirectly contributed approximately seven percentage points to inflation. The government aims for inflation to begin declining in the fourth quarter of 2026 and reach single digits by 2029, with targets set at 21 percent for 2027, 13.5 percent for 2028, and 9 percent for 2029. Alongside the inflation outlook, Turkey has also adjusted its economic growth expectations. The forecast for 2026 GDP growth has been lowered to 3.3 percent from an earlier estimate of 3.8 percent.