Turkey’s Medium-Term Program Faces Expert Backlash: Unrealistic Growth, Inconsistent Targets, and Fiscal Risks

Summary: Turkey’s 2026–2028 Medium-Term Program (OVP), prepared by the Ministry of Treasury and Finance and the Presidency of Strategy and Budget, sets ambitious targets for growth, inflation, trade, and fiscal discipline. But economists are voicing strong concerns over its credibility, pointing to structural weaknesses, internal inconsistencies, and the absence of clear policy tools to deliver on its promises.

OVP Sets the Economic Roadmap for 2026–2028

Turkey’s Medium-Term Program (OVP) for 2026–2028, published in the Official Gazette, outlines the government’s roadmap for the next three years. The program includes forecasts for GDP growth, inflation, unemployment, trade balance, and fiscal sustainability while laying out key policy priorities.

However, the plan has triggered a wave of criticism from economists, who argue that the government’s projections lack solid foundations and fail to present credible strategies for achieving its targets.

Economists Question Growth Projections

One of the main criticisms focuses on the OVP’s growth assumptions. The program targets annual growth rates between 3.3% and 5% through 2028, but economists warn these figures lack realism amid global economic uncertainty and Turkey’s structural challenges.

Prof. Dr. Hakan Kara, former Chief Economist at the Central Bank of Turkey, highlighted that the program’s growth estimates fall below Turkey’s long-term potential:

“For the first time in history, I see four consecutive years of GDP growth forecasts below the country’s potential. These projections are overly optimistic given the structural reforms required.”

Kara added that while long-term projections are inherently uncertain, the OVP appears more focused on signaling a commitment to lowering inflation rather than presenting a robust growth strategy.

Rising Public Spending Risks Fiscal Discipline

Another major point of contention is the program’s reliance on high public spending and government-led investment to stimulate growth. Economists warn that this approach could:

• Put additional pressure on budget balances

• Complicate efforts to reduce inflation

• Threaten fiscal discipline in the medium term

Analysts argue that while public spending has helped cushion short-term demand shocks, the OVP offers little detail on how the government intends to finance reconstruction projects, manage rising expenditures, and simultaneously meet its deficit reduction goals.

External Imbalances and Trade Deficit Concerns

The OVP targets a steady decline in Turkey’s current account deficit over the next three years but fails to outline a clear strategy for improving exports, import substitution, or energy security.

Economists note that Turkey’s chronic trade imbalance remains one of its deepest structural vulnerabilities, and without comprehensive policy reforms, the projections are unlikely to materialize.

Earthquake Recovery Funding Left Unclear

One of the most debated aspects of the program is its handling of funding for earthquake-hit regions. The OVP references large-scale reconstruction projects but provides no clarity on:

• How resources will be allocated

• How these expenditures align with inflation targets

• The financing model for long-term recovery

Economist İnan Mutlu criticized the lack of transparency, labeling the program “a document of wishes and hopes rather than actionable policies” and pointing out that allocated funds for earthquake recovery have not yet been spent.

Contradictions in Inflation, FX, and Trade Forecasts

Financial markets expert İris Cibre called attention to several inconsistencies between the OVP’s projections:

• Inflation is forecast at 16% in 2026, yet the dollar exchange rate is expected to rise 17.6% — an unusual divergence

• Public consumption is projected to rise sharply in 2026 despite 2025’s contraction, likely tied to the upcoming election cycle

• Trade deficit widens, but current account deficit narrows

• Energy imports decline, yet overall imports remain high

• Public spending and private consumption increase, but inflation is projected to fall

• Unemployment drops even as labor force participation rises

Cibre argued that these assumptions suggest internal contradictions within the program’s macroeconomic framework.

Atabay: “An Optimistic Program Without Anchors”

Economist and PA Turkey contributor Dr. Güldem Atabay was more direct in her criticism, questioning the OVP’s internal coherence and its ability to serve as a credible policy anchor:

“The program sets 5% GDP growth alongside a 1% current account deficit in 2028. Has anyone informed the Central Bank that this is impossible under existing conditions? It also projects 8% inflation and a budget deficit below 3% in the same year. These targets are detached from reality.”

Atabay added that the program lacks a clear strategy to reconcile high growth ambitions with fiscal consolidation and disinflation goals, leaving investors uncertain about policy direction.

Policy Gaps and Market Implications

Analysts argue that while the OVP aims to project stability and predictability, it leaves unanswered questions on several fronts:

• How inflation will be reduced without tightening monetary policy

• How rising public spending will coexist with fiscal consolidation

• How reconstruction financing will be integrated into budget plans

• How Turkey plans to reduce external vulnerabilities

Without stronger policy tools and transparent financing plans, economists warn that the program risks losing credibility with investors and markets.

Bottom Line

Turkey’s 2026–2028 Medium-Term Program sets ambitious targets for growth, inflation, and fiscal consolidation, but experts argue it lacks the policy anchors, structural reforms, and credible assumptions needed to deliver.

As economic uncertainties persist — from global demand risks to domestic fiscal pressures — the gap between official projections and market realities may widen further, challenging both investor confidence and macroeconomic stability.