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Türkiye’s Treasury and Finance Minister Mehmet Simsek said Friday inflation is expected to decline to around 31% by the end of 2025, with the government aiming to bring it below 20% in 2026 and down to single digits in 2027.
Speaking in London at a public gathering organized by the Union of International Democrats, Simsek said, "We have made substantial progress," noting that inflation, which stood at 64% in 2023-end and fell to 44% in 2024-end, while reaffirming that price stability remains the government’s top priority.
Türkiye's Medium-Term Program (MTP) for the 2026–2028 period projects end-2025 inflation to ease to 28.5%, with forecasts of 16% for 2026 and 9% for 2027.
Simsek emphasized the importance of fiscal consolidation in supporting the disinflation process. He said public expenditures under the government’s savings circular were reduced from 4.6% of the budget to approximately 3%, amounting to a nearly 30% cut in relative terms.
He noted that tighter spending discipline has allowed the government to redirect resources toward infrastructure and essential services. “We have reached the desired position in the budget,” he said, adding that future spending will focus on productive sectors and citizen needs.
Simsek also provided an update on spending in Türkiye’s earthquake-hit regions, stating that roughly $90 billion has been allocated so far. Of the planned 600,000 housing units, 350,000 have been completed, he said.
To ease pressure on rent inflation, the government plans to construct an additional 500,000 social housing units in the coming period, he noted.
Highlighting structural vulnerabilities, Simsek noted that Türkiye spent nearly $1 trillion over the past 24 years on fossil fuel imports—almost twice the size of its current public debt, which is under $550 billion.
He said the transition to renewable energy is accelerating and described green transformation as an economic necessity. Türkiye’s relatively low debt ratio, according to Simsek, creates space to support industrial upgrades and long-term productivity.
Simsek pointed to Türkiye’s falling sovereign risk premium as evidence of improved macroeconomic credibility, noting that the country’s credit default swap (CDS) spread dropped from 700 basis points in mid-2023 to below 240 basis points.
Trade ties with the European Union are also expanding. Simsek said bilateral trade could reach $230 billion this year, making the EU Türkiye’s largest external partner. He added that negotiations for an expanded trade agreement with the United Kingdom, covering services, agriculture, and public procurement, are in their final stage.
Simsek said 2026 will be declared a "reform year" aimed at consolidating recent economic gains, adding that efforts are underway to strengthen the rule of law and improve democratic standards.
He added that Türkiye may soon enter the World Bank’s "high-income" category based on updated thresholds. "We do not want our achievements to be temporary,” Simsek said. “To make them permanent, they must be supported by structural transformation and reforms."
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