The IMF Executive Board has concluded the 2025 Article IV Consultation with Türkiye.
In its statement, the Fund noted that inflation declined from 49.4% year-on-year in September 2024 to 30.9% in December 2025, supported by strong fiscal consolidation, prudent income policies, and a tight monetary policy stance.
The statement said, “Since the 2024 Article IV Consultation, Türkiye’s disinflation program has delivered results.”
Following a temporary slowdown in mid-2024, Gross Domestic Product (GDP) growth remained strong. Growth is estimated at 4.1% in 2025.
The IMF also noted that demand for the Turkish lira strengthened, supporting international reserves, while the current account deficit continued to be adequately financed.
Tight monetary policy expected to support disinflation
The statement emphasized that tight monetary policy, moderate wage increases, and an overall neutral fiscal stance are expected to support gradual disinflation. “The current policy mix continues to balance disinflation with stable growth,” it said.
With domestic demand remaining strong, year-end inflation for 2026 is projected at 23% year-on-year. Growth is expected to reach 4.2% in 2026, supported by further policy rate cuts and rising confidence.
The IMF added that the current account deficit is expected to remain adequately financed, while depositor confidence and strong gold prices are projected to keep reserves around 80% of the IMF’s adequacy metric.
While growth is expected to remain solid and inflation to decline, the approach involves risks and costs. External risks remain elevated due to ongoing global trade uncertainty and regional conflicts.
A negative shock, such as rising energy prices or adverse weather conditions, could prolong the period of high inflation. The gradual disinflation approach may also weigh on the financial sector and slow productivity growth.
Emphasis on ambitious structural reforms
The IMF Executive Directors commended the authorities for the significant achievements of the disinflation strategy, noting that it has reduced macroeconomic imbalances, strengthened confidence, and preserved strong growth.
However, inflation remains above target and the economy remains vulnerable to shocks. Directors stressed the need for a tighter macroeconomic policy mix and ambitious structural reforms to entrench disinflation, further strengthen external buffers, and support inclusive medium-term growth.
The authorities were also praised for strong fiscal efforts last year, with Directors underscoring the need to continue fiscal tightening to support disinflation.
Measures to broaden the tax base and improve compliance were highlighted, along with the importance of rationalizing expenditures through the gradual removal of energy subsidies.
As fiscal space expands, additional resources could be directed toward social priorities. Aligning wage policies fully with inflation targets and strengthening oversight of public-private enterprises and state-owned enterprises were also supported.
Financial sector remains resilient
The statement called for maintaining a tighter monetary policy stance to secure lasting disinflation, while noting that policy rate adjustments should remain data-dependent and consider macro-financial effects.
The importance of central bank independence and communication was emphasized. The IMF recommended limiting foreign exchange interventions to smoothing volatility and gradually allowing greater exchange rate flexibility as inflation expectations become better anchored and reserve buffers are rebuilt.
The financial sector has remained resilient, supported by the authorities’ swift and effective response to market stress.
However, vigilance is required regarding elevated foreign exchange liquidity risks. Ongoing efforts to strengthen supervisory and resolution frameworks were welcomed.
Economic projections
According to the IMF’s projections, Türkiye’s economy is expected to grow by 4.1% in 2027 and by 4% annually during 2028–2031.
The unemployment rate is projected at 8.3% in 2026, 8.7% in 2027, and 9.1% during 2028–2031.
Inflation is expected to decline to 19% next year and then to 15% by 2031. The current account deficit is projected at 1.4% of GDP during 2026–2028 and 1.5% during 2029–2031.
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