Ankara: The International Monetary Fund (IMF) announced that Trkiye's disinflation program has been successful, noting that the current policy mix effectively balances disinflation with steady economic growth.
According to Anadolu Agency, the IMF Executive Board recently completed its 2025 Article IV consultation with Trkiye. In a statement, the IMF highlighted the achievements of Trkiye's disinflation program since the 2024 Article IV consultation. Inflation in the country decreased from 49.4% year-over-year in September 2024 to 30.9% in December 2025, driven by strong fiscal consolidation, prudent income policies, and a tight monetary policy stance.
The IMF also reported that after a temporary slowdown in mid-2024, GDP growth in Trkiye has remained robust, with a forecast of 4.1% for 2025. The demand for the Turkish Lira has increased, strengthening international reserves, and the current account deficit is adequately financed.
The IMF anticipates that tight monetary policy, moderate wage growth, and a broadly neutral fiscal policy will support gradual disinflation. By the end of 2026, inflation is expected to reach 23%, with growth projected at 4.2% for the same year. The current account deficit is expected to remain sufficiently financed, supported by depositor confidence and strong gold prices.
Despite positive indicators, the IMF cautioned that the approach carries risks and costs, with external risks remaining high due to global trade uncertainties and regional conflicts. Potential adverse shocks, such as increased energy prices or negative weather events, could extend the period of high inflation. The gradual disinflation approach has also impacted the financial sector and slowed productivity growth.
In its assessment, the IMF's executive board lauded Trkiye's authorities for significant achievements under the disinflation program, which has addressed macroeconomic imbalances, bolstered confidence, and preserved growth. However, with inflation remaining above target, the IMF emphasized the need for tighter macroeconomic policies and ambitious structural reforms to further reduce inflation, strengthen external buffers, and support inclusive growth.
The IMF commended last year's fiscal efforts and advocated for continued fiscal tightening to reinforce disinflation. Measures to broaden the tax base, improve compliance, and streamline expenditures were recommended, alongside a call for well-communicated measures to minimize inflationary impacts while protecting vulnerable households.
The financial sector in Trkiye remains robust, supported by effective responses to market stress. The IMF suggested tighter monetary policy to ensure durable disinflation, with policy rate decisions needing to be data-dependent and mindful of macro-financial effects.
The IMF also urged for structural reforms to enhance productivity, resilience, and medium-term growth, focusing on labor, education, governance, support for SMEs, and increasing the share of renewables in the energy mix.
Economic forecasts by the IMF project Trkiye's economy to grow by 4.1% in 2027 and by 4% annually from 2028 to 2031. The unemployment rate is expected to be 8.3% in 2026, rising slightly to 8.7% in 2027, and reaching 9.1% between 2028 and 2031. Inflation is projected to fall to 19% next year and ease to 15% through 2031, with the current account deficit expected to be 1.4% of GDP in 2026-2028 and 1.5% in 2029-2031.