Turkey’s three-year economic program, launched under Treasury and Finance Minister Mehmet Şimşek after the June 2023 elections, has failed to bring down inflation, with the annual rate stuck around 30% and public confidence all but gone, according to ANKA Economy Coordinator Erdal Sağlam.
Inflationary pressures persist despite tight policies
Sağlam noted that after soaring above 65% at the end of 2023, inflation has barely budged. Year-end forecasts point to 28-30%, and temporary price spikes in July and August could worsen the outlook. “Confidence that the fight against inflation will succeed has almost completely disappeared,” Sağlam wrote, adding that a single-digit target is now out of reach under the current ruling AK Party government before the next election, expected by spring 2028.
Financial stability comes at a high social cost
While the program has achieved budget discipline, lower CDS premiums, and increased reserves, the side effects are becoming unbearable. Although the policy rate is 37%, effective rates hover at 40%, and businesses must cope with borrowing costs of 55-60%. Sağlam warned that small and medium-sized enterprises (SMEs) and industrial producers are under severe strain, and the manufacturing sector’s share of the economy continues to shrink.
Minimum wage falls behind poverty line
The monthly minimum wage of 28,000 Turkish lira was already insufficient by January, and by July the hunger threshold for a family of four had reached 36,000 lira. Alongside retirees and fixed-income earners, consumers are also facing a growing risk of non-performing loans. Sağlam pointed to rising calls to abandon inflation fighting and instead loosen policies, stressing that mounting social discontent could escalate if conditions do not improve quickly.
