The Presidential Decision regarding the approval of the Medium-Term Program (MTP) that includes the 3-year objectives and policies of the Turkish economy was published in the repeated issue of the Official Gazette dated September 6, 2023, with number 32301.

The 2024-2026 Medium-Term Program (MTP) presents a series of strategies and goals aimed at strengthening Turkey’s economic growth. The main objective of the program is to achieve stable economic growth while reducing inflation to single-digit levels. In line with this, strict monetary policies and fiscal discipline will be adopted. The program aims for a transition to a production and export structure that embraces technological developments with green and digital transformations. The program also plans to adopt environmentally friendly policies in the energy, industry, transport, and agriculture sectors and to strengthen Turkey’s international competitiveness. Reducing import dependency and improving the current account balance through high value-added production is targeted. Ensuring financial stability, increasing domestic savings, and developing capital markets are emphasized. Priority is given to reducing earthquake and disaster risks in public expenditures, while savings are planned for other expenditures. Generally, the priorities of the program include sustainability of public finance, promoting green and digital transformation, and improving income distribution.

Fundamental Economic Figures in MTP

wdt_ID Indicator 2023 2024 2025 2026
1 Income Per Capita (GDP, Dollar) 12,415 12,875 13,717 14,855
2 Growth - GDP Growth 4.4% 4% 4.5% 5%
3 Unemployment Rate (%) 10.1% 10.3% 9.9% 9.3%
4 Inflation - CPI Year-End, % Change 65% 33% 15.2% 8.5%


Growth:
As Turkey prepares to face the new century, it will prioritize price and financial stability and aim for sustainable and inclusive economic growth. Within this framework, an approach that will increase efficiency with free market and competition will be adopted. Supported by structural reforms, this approach will be transparent, consistent, predictable, and compliant with international norms. Monetary, fiscal, and income policies will be coordinated to ensure growth that supports investment, employment, production, and exports. Sustainable growth will be achieved by improving the business and investment environment in Turkey. A focus will be placed on high-value-added exports while considering the balance of internal and external demand. There are plans to strengthen the technological infrastructure, human capital, entrepreneurship, research, innovation, and design capacity.

While post-earthquake work continues rapidly, an approach to development resilient to disasters will be adopted. This approach, integrated with the port industry, will encourage horizontal architecture and low-density urbanization. Efforts will be made to prevent concentration in disaster-prone areas. It’s planned to reinforce these areas and increase the contribution of urban economies to sustainable growth. During the program period, a growth strategy supported by efficiency gains will be adopted. An average annual growth rate of 4.5% is targeted, with the aim of raising Turkey’s income group.

An industrial inventory will be updated to establish data-driven industrial policies. Technology-focused investments, new industrial zones, and logistic routes will be supported. Uniformity and predictability in public procurement will be increased. The effects of state aids will be measured and aligned with development goals. Steps will be taken to promote domestic production and develop technological capabilities. The private sector, university, and public R&D centers will collaborate to support technology and product development processes. Access to credit for SMEs will be facilitated, and the use of digital technologies, as well as green technologies, will be promoted. The transfer of defense industry achievements to civilian fields will be encouraged. Efforts to incentivize the qualified human resources needed in the R&D field will continue. Measures will be taken to protect and efficiently use agricultural lands. Production planning will be made for strategic agricultural products to ensure the stability of food prices and food supply security. Greenhouse Organized Agriculture efforts in areas with geothermal energy resources will be supported.

Employment: The second part of the program outlines the main policies and measures related to employment and the labor market. Structural reforms in employment and the labor market are anticipated during the program period, aiming for targeted growth rates and increased employment. The program anticipates an average annual increase in employment by 909,000 people. The unemployment rate is targeted to decline to 9.3% by 2026.

To meet the need for skilled intermediate staff, policies and measures include starting vocational training programs in cooperation with industry, updating vocational and technical education curricula with the private sector, encouraging early employment participation of vocational and technical high school graduates, creating programs to train skilled labor in strategic areas, and launching programs that will increase individuals’ productivity and vocational belonging.

The program places significant emphasis on training a qualified workforce. Within the program, green and digital transformation holds a significant place while addressing changes and innovations in the labor market. Measures promoting the employment participation of young people, women, and special groups are prominently listed. There’s a special emphasis on collaboration between education and the private sector. Establishing family and youth support mechanisms signifies an approach aiming to increase supports in this area. Overall, the stated policies and measures related to employment focus on modernizing the labor market to meet modern needs and challenges, increasing the economic participation of young people and women, and focusing on training a skilled workforce.

Price Stability: Price stability will be the focal point within the program, and accordingly, monetary, fiscal, and revenue policies will be coordinated. Active measures will be taken against factors affecting price increases, and a tight monetary policy will be implemented. The disinflation process, which is planned to start in 2024, will continue until the end of 2026, aiming to reduce the annual increase rate of CPI to 8.5%. Additionally, there are goals to stabilize the Turkish lira and reduce inflation.

In the fight against inflation, the Central Bank will utilize all its tools effectively, and continuous inflation targeting is planned. The floating exchange rate regime will continue, and it’s anticipated that financial stability will support the economy and direct economic activity without creating inflationary pressure. Measures will be taken to control economic imbalances and potential consumption increases that might drive inflation. In line with growth policies based on investment, employment, production, and exports, financing opportunities will be provided to the real sector at appropriate costs. Maintaining fiscal discipline, reducing indexing of managed prices to past inflation, promoting the Turkish lira in the financial system as a primary store of value, and increasing the weight of the Turkish lira in household and company assets will be significant in this process. In the housing market, policies include increasing the housing supply that shrunk during the pandemic, developing social housing projects for low-income citizens, and offering housing loans under favorable conditions.

Balance of Payments: It is predicted that there will be an increase in export and travel revenues in 2024. The slowdown in commodity prices and gold imports will also improve the current account balance. Rapid response to global developments, focusing on green transformation and digitization, and increasing Turkey’s competitiveness in foreign trade are targeted. With this approach, growth will be achieved in the export of goods and services both quantitatively and qualitatively, and gradual and permanent improvements will be made in the current account balance. Plans include obtaining a larger share in global investments to improve the quality of financing the current account deficit. Under the policies and measures, while updating the Customs Union with the EU, strategic plans supporting digital economy and green transformation will be implemented. The focus areas of investments will include elements such as technology transfer and green energy use. Efforts will be made to optimize customs procedures to facilitate foreign trade, and the value added and technological level of exports will be raised. A range of strategic approaches, such as diversifying tourism, enhancing service quality in tourism, promoting health tourism, and sports diplomacy, will be adopted. Turkey will continue to progress towards becoming an international center in cultural activities like film production. Encouragement will be given to companies to target broad markets through overseas development cooperation projects and activities. The goal is to increase financial service exports with a competitive financial ecosystem at the heart of the Istanbul Finance Center. Digital infrastructure developments will be made to encourage e-exports, and more exporters will be supported to operate in e-commerce. Work will be done to establish an international system on halal certification. In the energy sector, efforts will be accelerated for oil and natural gas exploration activities to reduce dependency on foreign sources. Digital market regulations will be harmonized with the EU. Natural gas storage capacities will be increased, and the added value of domestic natural gas will be enhanced. Investments in renewable energy sources will be increased, and R&D activities in nuclear energy will be supported. Sustainable and international standard research will be conducted in mining. Domestic production of rail systems will be encouraged. Domestic production and external purchase strategies in agriculture will be determined. Efforts to strengthen Turkey’s international image will intensify. Commercial and economic relations, energy, and logistics will be deepened. Cooperation with Turkish citizens living abroad will be increased. Negotiations for new free trade agreements will be made. Commercial relations will be strengthened through economic commissions. Active participation will be provided in international organizations.

Financial Stability: This title presents a roadmap containing strategic goals and implementation steps aimed at increasing Turkey’s financial stability. It mainly focuses on themes such as ensuring sustainable financial stability, efficient distribution of resources, popularizing financial literacy, and developing capital markets. The basic goal mentioned in the program is to ensure financial stability in a sustainable way. In line with this goal, emphasis is placed on issues such as optimizing resource distribution, expanding financial literacy activities, and developing capital markets. By adhering to market economy principles, strengthening the elements of the financial system, reducing vulnerabilities, and supporting the macroeconomic framework are targeted. Under the Financial Stability title in the program, 24 different policy and measure items are listed. These items cover a wide range of topics such as monetary policy, macro-prudential measures, increasing the attractiveness of the Turkish Lira, financial literacy, developing capital markets, participatory finance, digital Turkish Lira, green finance, and improving pension systems. The spread of the Digital Turkish Lira and the development of green finance products compliant with environmental, social, and governance criteria underline the importance of financial innovation. Goals such as increasing the international integration of the Istanbul Finance Center and creating an innovative participatory finance ecosystem support the vision of making Istanbul an international finance center. Overall, this title deals in detail with Turkey’s goals, plans, and implementation steps to increase financial stability. Various policy and measure items show that a comprehensive strategic approach will be followed.

Public Finance: This section primarily explains how Turkey plans to maintain its fiscal discipline, economic stability, and public debt management. It also details how this strategic approach will be measured with specific numerical targets. In the last part, various fiscal and economic measures are listed under the policy and measures title. The policy and measures highlighted include saving on public expenditure, restructuring certain disaster areas, running public expenditure policy within a multi-year budgeting approach, rationalizing the public investment program, updating public procurement legislation, rationalizing public procurement, increasing sustainable and healthy revenue sources in public financial management, carbon tax and environmental taxation, compliance with the acquis and international standards during the EU accession process. The section also touches on Turkey’s proposals and plans related to public administration, social security system, health services, drugs and medical supplies, employment incentives, budget and financial management. Especially, the effectiveness, efficiency, and sustainability of policies and management related to social security and health are one of the main themes of this part.

Disaster Management: This section discusses the strategies, policies, and measures related to disaster management in Turkey. It focuses on the necessary actions and measures to be taken after the earthquakes experienced in Kahramanmaraş and Hatay. Main objectives in disaster management include increasing the effectiveness of the disaster management process, building resilience against disasters, reducing risks and damages, and promoting disaster awareness. Additionally, in strategic planning, steps to be taken after the disasters in the Kahramanmaraş and Hatay regions, provision of resilient housing and workplaces, construction with domestic technology, and measures for developing settlement and industrial areas in line with regional development plans are emphasized. In the policies and measures section, the normalization processes of the regions affected by disasters, inter-institutional cooperation, construction of resilient infrastructure, economic revitalization, creation of healthy living spaces, spatial planning, special measures for disaster-prone regions, and recommendations for technological development and early warning systems are listed. All these measures and policies reveal Turkey’s more prepared and resilient approach to disasters. This information should be considered as an important source for disaster management and urban transformation.

Green Transformation: The effects of global climate change, changes in production and consumption brought about by the Covid-19 pandemic, and the impact of the Russia-Ukraine war on energy balances have increased the importance of sustainable policies and practices. Especially in sectors like energy, industry, transportation, and agriculture, policies on renewable resources, energy efficiency, electrification, and circular economy have come to the forefront. Turkey, directly affected by climate change due to its geographical location and natural resources, is also influenced by international policies and developments related to climate change due to its global economic integration. By joining the Paris Agreement and adopting the net-zero emission target by 2053, Turkey has also prepared the Green Deal Action Plan to be compatible with its trading partner, the European Union. Under the program, in line with the 2053 net-zero emission target, studies will be conducted on reducing greenhouse gas emissions, adapting to climate change, competition, and efficiency. During this process, efforts will be made to best utilize global financing sources for developing national incentive mechanisms. The preparation of legislation related to climate change is a crucial step. In this context, it’s necessary to align the National Emission Trading System (ETS) with the European Union Border Carbon Regulation Mechanism. Long-term strategies will be planned in line with the 2053 net-zero emission target. Moreover, emphasis will be placed on preparing sectoral roadmaps in line with the European Green Deal. Updating the Green Deal Action Plan for export markets and setting up infrastructure for monitoring and pricing greenhouse gas emissions are aimed for. There should be support for R&D technologies promoting energy transformation, and adaptation to the EU’s circular economy policies. The spread of the circular economy model and regulatory work for carbon footprint calculations are of great importance. It’s planned to promote zero-waste practices, create secondary product standards, and incentive systems. The renewed product system aims to popularize the sustainable consumption model, and there’s a need to implement training programs for new occupational groups. Strategies for green public procurement, establishment of environmentally friendly transportation terminals, and implementation of green port practices are planned. It’s essential to focus on promoting electric vehicles, implementing low-emission road construction projects, and sustainable urban transportation projects. The use of domestic products, the implementation of the Renewable Energy Resource Area (YEKA) projects, the evaluation of heat potential, and regulatory work for waste heat use are on the agenda. Lastly, the implementation of the energy efficiency strategy document and action plans, energy efficiency projects for public buildings, and studies to assess wind energy potential are targeted.

Digital Transformation: The plans and goals related to Turkey’s digital transformation are extensively addressed in the program. In this context, the importance of digital technologies in global production and competition is emphasized, while it is stated that digital transformation is mandatory in SMEs and service sectors. At the same time, challenges of data usage in a digitizing world, such as cybersecurity and privacy, are pointed out. It’s emphasized that public administration must effectively use digital technologies and create a strategy for data governance. In the policies and measures section, topics like Turkey’s integration into the data economy, establishing a national data strategy, imparting digital skills, and the goal of becoming a regional data processing center stand out. Furthermore, expanding broadband infrastructure, increasing next-generation mobile communication technologies, investing in local digital technologies, enhancing the competencies of domestic software companies, and promoting open-source software are also part of the plans. In conclusion, this section comprehensively addresses the path Turkey will follow in its digital transformation process and the critical importance of this process for the country. Data management, cybersecurity, domestic technological development, and digitized public services emerge as key elements of this transformation.

Business and Investment Environment: This section elaborates in detail the goals and policies regarding how Turkey aims to improve its business and investment environment. Under Bureaucratic and Legal Predictability, there’s a focus on accelerating economic activities, reducing transaction costs, and creating a competitive structure. In the Priority Sectors and Investments section, supporting private sector investments, strengthening the allocation system for investment locations, and simplifying legal processes in trade and finance are foreseen. Furthermore, steps to strengthen intellectual property rights, improve taxation practices, and promote entrepreneurship are highlighted. Considering the Innovation and Technology section, there are strategies for encouraging innovative product and process development, encouraging R&D activities, and supporting technology transfers. The program aims to improve the ease of doing business and increase Turkey’s attractiveness for foreign investors. To achieve this, it outlines several strategies, including reforms in the legal system, improvements in the business environment, enhancing the predictability of economic policies, and strengthening public-private cooperation. The section shows that Turkey is determined to increase its competitiveness by aligning its business environment with international standards and by prioritizing innovation and technology.

Decision on the Approval of the Medium-Term Program (2024 – 2026) (Decision number: 7597) (Turkish)