Inflation in Türkiye to drop below 20% in 2026

By Gokhan Ergocun

ISTANBUL (AA) - Türkiye's inflation will continue to decline, the main goal is to bring it below 20% in 2026, the treasury and finance minister said Friday.

Speaking at the Independent Industrialists' and Businessmen's Association's event in Istanbul, Mehmet Simsek said, "Of course, we cannot say it was an easy year. Because last year was truly a difficult year.

"But despite all the difficulties, we continued to make progress. I know that the balance sheet of the real sector may show a different picture. But ultimately, macrofinancial stability is a prerequisite for a lasting improvement in the balance sheet."

Simsek stated that the country has alleviated concerns about reserves and ensured broad-based reserve adequacy, the five-year credit default swap (CDS) has declined and external financing costs have fallen.

He explained that foreign financing costs declined and the government has successfully managed the exit from Currency-Protected Deposits (KKM), achieving a $123 billion increase in net reserves excluding swaps.

“Thanks to the decrease in KKM and the increase in net reserves excluding swaps, we achieved a $266 billion improvement in our country's balance sheet during the program period," he said.

Inflation is falling; in 2023, it was around 65%, in 2024, it fell to 44%, and in 2025 was down to 31%. The decline is not one-dimensional; there is a real decline in inflation across all sub-components, he said.

"Annual service inflation fell from 91% to 66% in 2024 and to 44% in 2025. Food inflation was 72% in 2023, fell to 44% in 2024, and declined to around 28% in 2025. Core goods inflation similarly fell to 27% and even below 18% in 2025," he said.

- Türkiye's GDP target

Simsek said Türkiye grew 3.7% in the first three quarters of 2025, and the target for 2026 is around 3.8%.

"Unemployment rates have remained in single digits for 31 months because labor force participation rates have been low,

"The main source of growth during this period comes from total factor productivity, which accounts for more than half. This is actually the most important factor in reducing inflation while growing," he said.

Simsek stated that there has been a recovery in the manufacturing industry and industrial production.