Turkey’s Economic Squeeze: Inflation Target Soars to 28.4%, Growth Cut as Labor Underuse Hits 30.6%
Turkey is facing a harsh economic reality check, as the government sharply raises its inflation target for 2026 while cutting growth forecasts, even as new data reveals that nearly a third of the workforce is struggling to find full, stable employment.
Turkey’s government has sharply raised its inflation target for 2026, lifting it from 16% to 28.4%, while simultaneously lowering the economic growth forecast from 3.8% to 3.3% [236479]. The revised figures were announced in the country’s new Medium-Term Program (OVP), a key policy document that outlines the government’s economic expectations for the coming years [236479]. The move reflects ongoing price pressures in the Turkish economy, which has struggled with high inflation in recent years [236479]. The new target suggests that officials expect prices to rise at a much faster pace than previously planned, while the downgraded growth forecast signals a more cautious outlook for economic expansion as the government balances efforts to control inflation with the need to support business activity [236479].
The updated targets come alongside fresh labor market data showing significant weakness beneath the surface. The official unemployment rate rose to 8.1% in July, with the count of unemployed reaching 2.86 million, according to the Turkish Statistical Institute (TÜİK) [231660]. However, the broader “idle labor force” rate—which includes the officially unemployed, underemployed individuals, and those who have stopped looking for work—has climbed to a staggering 30.6%, representing roughly 12.3 million people [231660]. Experts note the gap between the two figures highlights a growing problem: many people have either given up searching or are working fewer hours than they would like [231660].
Adding to the strain on public finances and household budgets, a Turkish lawmaker has sharply criticized a government decision to privatize the country’s bridges and highways for the next three decades [236492]. Deniz Yavuzyılmaz, a deputy for the New Party from Zonguldak province, said the move will lead to higher tolls for drivers and called the decision “selling off Turkey’s future” [236492]. The government has not yet commented on the lawmaker’s claims [236492].