Türkiye’s Economic Program “Has Run Its Course,” Critics Say
ekonomi cop
Türkiye’s current economic program, led by Finance Minister Mehmet Şimşek, is facing mounting criticism as analysts argue it has lost credibility amid escalating geopolitical shocks and deepening domestic strain. Critics warn that both the policy framework and its political backing may no longer be sustainable.
“Shock Is Not Manageable,” Critics Argue
Following a brief and fragile ceasefire linked to rising tensions involving Iran, Şimşek reiterated that the economic shock remains “manageable” and would not derail the government’s program.
However, critics strongly dispute this assessment, arguing that neither the external shock nor the current policy framework can be sustained under present conditions.
Despite official optimism, calls are growing for a fundamental reset of Türkiye’s economic strategy.
Political Constraints Limit Time Horizon
Şimşek has defended the program, saying it has “proven its credibility” and requires another 12 to 18 months to deliver results.
Yet analysts point out that political realities may not allow such a timeline.
With elections expected within the next one to two years, the ruling Justice and Development Party faces mounting pressure to deliver tangible economic improvements. Since returning to power in 2023, the government has struggled to stabilize the economy, and patience within political circles is wearing thin.
Observers suggest that internal dynamics—particularly within the presidential system—may limit the program’s lifespan regardless of its economic merits.
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A Crisis Outlasting Its Own Remedy
Türkiye’s current economic trajectory can be traced back to late 2021, when emergency measures such as currency-protected deposits were introduced to prevent a currency crisis.
By mid-2023, as the economy approached a breaking point, Şimşek took office and pledged a return to “rational policies.” Since then, a tight monetary and fiscal program has been implemented.
However, critics highlight a key paradox:
- The economic crisis lasted roughly 2.5 years
- The stabilization program is now entering its third year
- Yet no clear recovery has materialized
This has fueled arguments that the policy response is outlasting—and failing to resolve—the crisis it was designed to address.
Iran Shock Disrupts Core Assumptions
The outbreak of conflict involving Iran in early 2026 is seen as a turning point that has undermined the program’s core assumptions.
According to analysts:
- Inflation and interest rate targets have become increasingly unrealistic
- External balances are deteriorating
- Energy price shocks are feeding inflation
The Central Bank of the Republic of Türkiye has reportedly spent tens of billions of dollars in reserves to stabilize the currency, while also implementing de facto rate hikes.
Meanwhile, public borrowing has surged sharply, with the Treasury increasing its debt stock significantly in recent months.
Inflation, Growth, and External Balance at Risk
Even under relatively optimistic scenarios, inflation is expected to remain elevated, with year-end projections now viewed as overly hopeful.
At the same time:
- Growth forecasts are being revised downward
- The current account deficit is re-emerging as a concern
- Monetary tightening is intensifying
Şimşek has acknowledged that the current account deficit may widen and growth may slow, but maintains that these effects are manageable within the program framework.
Critics, however, argue that these developments signal a deeper structural breakdown.
Limited Room for Policy Maneuver
The Central Bank is widely expected to continue tightening policy, with further rate hikes seen as likely in the near term.
Yet analysts warn that policy tools are becoming increasingly constrained:
- Foreign exchange reserves have been depleted
- Fiscal space is narrowing
- External shocks remain unpredictable
This leaves policymakers with limited flexibility to respond to further deterioration.
Calls for a New Economic Framework
Some economists argue that the government should use the current geopolitical shock as an opportunity to reset its economic strategy.
Rather than defending the existing program, they suggest:
- Acknowledging its limitations
- Designing a new policy framework
- Rebuilding credibility through transparency
Such a shift, they argue, could help mitigate the long-term economic and political costs.
Outlook: A Difficult Adjustment Ahead
As Türkiye navigates a complex mix of domestic fragility and external shocks, the sustainability of its current economic program is increasingly in question.
Whether policymakers choose to persist with the existing framework or pivot toward a new approach will likely shape the country’s economic trajectory in the months ahead.
Recep Genel, NEFES, PA Turkey newsdesk
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