Turkey raises inflation forecast to 28.4% citing Middle East war impact
Turkey's Vice President Cevdet Yilmaz revised the year-end inflation projection upward to 28.4% due to rising global conflict costs, while UK Chancellor John Healey argues fiscal discipline remains essential despite bond market volatility.
Vice President Cevdet Yilmaz unveiled a new economic programme for Turkey through 2029, raising the projected year-end inflation rate to 28.4%. This figure represents a significant increase compared to the previous 16% target set in the 2026-2028 medium-term plan. Yilmaz stated that the war in the Middle East has been estimated by the central bank to contribute approximately seven percentage points to inflation through direct and indirect effects. Historical data shows annual inflation remained above 30% since December 2021, peaking at over 75% in May 2024 before easing to 31.51% in August. The new forecast anticipates a decline to 21% in 2027, 13.5% in 2028, and 9% in 2029.
Separately, UK Chancellor John Healey plans to address the Parliament on Monday regarding fiscal strategy. He will argue that government plans to boost regional growth will help the economy turn a corner despite current volatility in bond markets. The upcoming budget scheduled for late October aims to protect £24bn in fiscal headroom. Economic advisers suggest Healey may need to raise taxes or cut spending due to soaring global yields reaching an 18-year high last week. Healey emphasized that fiscal credibility is indivisible from good growth, noting that global uncertainty and potential inflationary pressures from geopolitical conflicts complicate the current financial environment.
