Republic of Türkiye: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Türkiye

The 2025 Article IV Consultation discusses that since the 2024 Article IV, Türkiye’s disinflation program has shown successes. The current policy mix continues to balance disinflation with steady growth. Tight monetary policy, moderate wage growth, and broadly neutral fiscal policy are expected to support gradual disinflation. A decisive announced shift toward tighter overall policies would bring inflation into single digits in 2027. This would entail a growth cost in the near term, but risks would fall too. Structural reforms aimed at improving productivity would put Türkiye on a more robust and resilient trajectory. The 2025 fiscal contraction is welcome, but further consolidation is required to lean against still-strong aggregate demand. Continuing consolidation into 2026 and 2027 with appropriately designed measures to support disinflation would reduce demand and price pressures. Improved productivity can help offset the costs of tighter policies. These should include reforms to improve skills, better support small and medium enterprises, and further strengthen Türkiye’s legal and governance frameworks, while reducing vulnerabilities to external shocks.