Turkey Lifts 2026 Inflation Forecast to 28.4% on Conflict

Turkey has revised its year-end 2026 inflation forecast upward to 28.4%, jumping significantly from a previous projection of 16%, as regional conflicts add severe upward pressure on domestic price growth and macroeconomic targets shift outward.

"We expect inflation to start declining again in the fourth quarter of 2026 and to reach 28.4 percent by the end of the year," said Vice President Cevdet Yilmaz.

Impact of Middle East Conflict on Prices

The upward revision stems largely from external geopolitical shocks rather than purely domestic monetary missteps. According to assessments by the country's central bank, the direct and indirect fallout from ongoing Middle East conflicts has added approximately 7 percentage points to Turkey's national inflation trajectory.

Alongside the worsening price forecasts, economic growth expectations have also taken a hit. Ankara lowered its 2026 growth forecast down to 3.3% from an earlier estimate of 3.8%.

Multi-Year Projections Through 2029

Under the newly unveiled 2027-2029 medium-term economic programme, the government anticipates a gradual easing of consumer prices over the remainder of the decade. Projections indicate that annual inflation will fall to 21% in 2027, ease further to 13.5% in 2028, and finally reach single digits at 9% by 2029.

These targets arrive as domestic price pressures show tentative signs of stabilization. Turkey's annual inflation rate eased slightly to 31.51% in August, down marginally from 31.75% in July.

What Is at Stake for Turkey's Economy

The shifting macroeconomic roadmap underscores the vulnerability of emerging market economies to regional security shocks and imported energy costs. As Turkish policymakers attempt to navigate disinflation alongside slowing economic expansion, the success of the multi-year program depends heavily on stabilizing external geopolitical factors that continue to inflate domestic costs.