The International Monetary Fund (IMF) held its 4th meeting with Turkey on September 27. reported that the article consultation was completed. In the statement, it was stated that the decisive change in economic policies over the past year has tightened Turkey’s general policy stance.
It was stated in the statement that tax and spending measures support efforts to restore fiscal prudence, and it was emphasized that commitment to stronger income policies strengthens credibility.
The statement stated that the policy turnaround reduced economic imbalances and revived confidence.
‘Inflation will fall further’
In the statement, it was pointed out that headline inflation decreased as tightening financial conditions put pressure on domestic demand, and that market sentiment improved sharply as domestic and foreign investors turned to TL-denominated assets, and that low commodity prices, live exports and decreasing gold imports led to a major improvement in both gross and net reserve positions. It was evaluated that it strengthened the current account by supporting
“Inflation is expected to decrease further within the framework of the authorities’ gradual policy adjustment,” the statement said. The expression was used.
What are the risks?
It was stated in the statement that the risks to the expectations are significant and downward, and these include stronger than expected wage and price inertia, reversal of capital flows, rising global energy prices and escalating geopolitical tensions.
In the statement, it was stated that significant financial and external vulnerabilities continued, and that the gradual approach to the fight against inflation extended the period in which risks could arise.
Fiscal consolidation proposal
In the statement, which also included the evaluations of the IMF Board of Executive Directors, Turkish officials were praised for their decisive policy tightening since mid-2023, which has helped significantly reduce macroeconomic imbalances and risks.
Pointing out that inflationary pressures are still high and there are significant downside risks, the statement called for the implementation of coordinated fiscal, monetary and income policies to anchor inflationary expectations and ensure macroeconomic stability.
The statement pointed to sustainable public debt levels and suggested larger and more front-loaded fiscal consolidation to support disinflation efforts and further strengthen buffers.
‘Tight monetary policy should be continued’
In the statement, it was stated that switching to determining wages in line with inflation expectations could help to significantly reduce inflation, and a call was made to maintain a tight, data-dependent monetary policy until inflation approaches target levels.
In the statement, it was noted that the Central Bank of the Republic of Turkey should be ready to tighten further, if necessary, to ensure that the path to reducing inflation remains on track.
In the statement, which emphasized the importance of vigilance and further reforms to maintain financial stability, Turkey’s removal from the Financial Action Task Force gray list was appreciated.
The statement called for advancing structural reforms to achieve more inclusive, greener and higher medium-term growth.
Inflation is predicted to fall to 24 percent in 2025
The statement, which also included economic forecasts, stated that the Turkish economy will grow by 3 percent in 2024, 2.7 percent in 2025, 3.2 percent in 2026, 3.4 percent in 2027, 3.7 percent in 2028 and 2029. It was stated that growth is expected to be 3.9 percent.
It was stated that the unemployment rate is expected to decrease gradually after a slight increase next year, to be 9.3 percent this year, 9.9 percent in 2025, and to decline in the following years to 9.2 percent in 2029.
In the statement, it was stated that the year-end inflation expectation is 43 percent for this year, 24 percent in 2025, 17.2 percent in 2026, 15.3 percent in 2027 and 15 percent in 2028 and 2029. It was reported that the rate is estimated to be 2.2 percent this year and decrease to 1.9 percent in 2029.
Source: www.dunya.com
