A top Turkish economy official said Thursday that the government’s commitment to the disinflation program remains “firm,” suggesting also that inflation is “expected to continue falling” even in a year marked by major shocks.

“Our commitment to the disinflation program is firm. Even in a year of major shocks, inflation is expected to continue falling, and to end the year in the mid-20s,” Treasury and Finance Minister Mehmet Şimşek said.

In a post on social media platform X, the minister noted he addressed investors at the Nomura Investment Forum Asia 2026. He also touched upon key messages shared at the Fireside Chat on “Türkiye’s New Route to Financial Stability.”

“We live in a shock-prone world and a tough neighbourhood. Shocks may slow the pace of the program’s delivery, but they are unlikely to change the direction of travel,” he wrote.

Türkiye, since the middle of 2023, has been pursuing a tighter monetary policy through an economic program aimed at reining in soaring prices and ensuring sustainable growth.

The annual inflation rate in April stood at 32.37%, with a monthly increase of 4.18%, according to official data. May data is due to be released on Friday.

The data in April marked a slowdown in the disinflation trend, following the start of the U.S.-Israel war on Iran, which sent energy prices sharply rising and revived inflationary pressures around the world.

Fiscal goals, lira target

On fiscal performance, Şimşek suggested that the “track record speaks for itself.”

“Over the past 23 years, Türkiye’s average budget deficit has been 2.6% of GDP. We reduced the deficit from 5.1% in 2023 to 2.9% in 2025 through spending controls, the fight against informality, stronger tax compliance, and improvements in audit and revenue collection,” he noted.

“Even after deploying fiscal space to cushion higher oil prices through the sliding-scale mechanism, we remain on track to meet our 2026 target and to keep the deficit below 3% of GDP over the medium term,” he added, referring to the special mechanism introduced amid the Iran war to offset the surge in energy prices.

On the lira, the minister said they “do not target a specific level,” explaining that the “confidence in the lira has strengthened significantly since the program began.”

“This reflects a tight monetary stance, effective macroprudential measures, and an FX reserve position that is fundamentally stronger than in previous episodes of volatility.”

Moreover, reflecting on the current account, Şimşek said that high energy prices “are likely to widen the deficit, but the impact remains manageable.”

“Softening domestic demand and resilient exports are likely to limit the fallout from the war,” he maintained.

“Exports are supported by supply-chain reconfiguration, the EUR/USD parity, and higher value-added production. We expect the current account deficit to be around 3% of GDP, below its long-term average,” he added.

At the same time, Şimşek shared the details of the recently unveiled measures and framework through which Ankara seeks to attract foreign direct investment (FDI), talent, and capital:

– Halving the corporate tax rate for manufacturers to 12.5%.

– A full tax exemption on services exports, including software, video gaming, medical tourism, education, engineering, and design.

– Zero corporate tax on transit trade.

– A new regional headquarters regime for multinationals, offering a 20-year corporate tax exemption and no income tax on salaries up to four to six times the minimum wage.

– The world’s longest non-dom regime, running for 20 years, with foreign-source income untaxed, inheritance tax at 1%, and only Turkish-source earnings taxed.

– A new home for startups: Fully digital company formation, tax-efficient ESOPs, venture capital tools, and a flagship hub at Atatürk Airport-Terminal Istanbul.

– A One-Stop Shop under the Presidential Investment and Finance Office for company formation, permits, tax, land, and incentives.

– An asset repatriation framework allowing cash, gold, and securities to be declared under a clear, FATF-aligned regime with varying tax rates based on asset type and holding period.

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Growth is set to slow this year across many developing markets as soaring energy costs and supply chain disruptions caused by the Middle East war weigh on activity, the European Bank for Reconstruction and Development (EBRD) said Wednesday.

Economies in the 41 countries covered by the development finance institution are expected to expand at a slower-than-forecast 3.1% this year, 0.5 percentage points below the level forecast in February.

“This report is a story of the continued energy shock,” EBRD Chief Economist Beata Javorcik told Reuters. “It hit at the moment that was challenging for Europe, a moment where the sentiment in European manufacturing has been weak.”

The bank flagged slower growth in key nations including Türkiye, Ukraine and Egypt.

But the biggest revisions from its February forecast came in Lebanon and Iraq, slashed by 6 percentage points and 5.1 percentage points, respectively. Both economies are expected to contract this year – Lebanon by 2% and Iraq by 1.5%.

For Türkiye, the bank cut its growth forecast to 3.5% from 4% for 2026 and to 4% from 4.5% for 2027.

It cited rising energy imports, persistent inflationary pressures and Iran war spillover risks on tourism and manufacturing supply chains.

“Disinflation is costly and acts as a brake on the economy, but the cost of not addressing inflation would be much higher,” Javorcik said.

Last year, EBRD region economies grew at a quicker-than-expected rate of 3.4% as they rapidly adapted to tariff and trade turmoil.

Inflation

“The conflict in the Middle East has delivered a new shock to regions already navigating weakness in manufacturing industries and fragile fiscal positions,” Javorcik said.

“Higher energy costs are squeezing competitiveness, reigniting inflation and tightening fiscal space at a time when many economies can least afford it,” she added.

Inflation rose by 1.2 percentage points between February and April to an average of 6.4%, with the bank warning that further food price increases – should higher fertilizer costs hit yields – would be felt most in lower-income EBRD economies.

It also cautioned that higher borrowing costs mean inflation spikes are no longer reducing debt-to-GDP ratios as they did after COVID-19.

The EBRD in April announced it was unlocking 5 billion euros ($5.8 billion) to help shore up economies hit by the Middle East war.

Shift from industry to AI

Energy price spikes this year have stayed below the surge after Russia’s 2022 invasion of Ukraine, but European gas prices are still around five times U.S. levels.

The report says this is already shifting exports away from energy‑intensive sectors, while AI‑related exports from EBRD regions are growing faster – rising 42% year-over-year in Hungary and 21% in Poland in 2025.

“This is a bright spot… the region already has comparative advantage in some of those industries,” Javorcik said, adding the AI boom could create opportunities and help cushion a structural adjustment as a result of the energy shock.

Almost two-thirds of EBRD economies, and around a quarter of economies globally, have implemented at least one measure to conserve energy or support consumers in response to higher energy prices.

Javocik warned that removing or lowering taxes on fuel “destroys the incentive for people to buy less and that may exacerbate sort of shortages going forward.”

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The global economic outlook hinges on how ​long the war in the Middle East lasts, with recession in some countries and sharply higher inflation a real possibility if ‌it drags on into next year, the Organisation for Economic Co-operation and Development (OECD) warned on Wednesday.

If the conflict proves short-lived, Gulf oil and gas production could gradually return to pre-crisis levels from the third quarter with shortages confined to Asia and cushioned by strategic reserves and shipments from other producers.

In that baseline scenario, global growth is projected to slow ​from 3.4% in 2025 to 2.8% in 2026 before picking up to 3.1% in 2027, broadly in line with the OECD’s March ​forecasts.

In its previous economic outlook, the group of 38 industrialized countries had forecast 2026 global growth of 2.9%.

“The longer the disruption lasts, the greater the economic, but also the social cost of this crisis, and it ⁠certainly will make policy changes much more difficult,” OECD chief economist Stefano Scarpetta told a press conference.

If energy disruption persists well into next year, global ​growth could slow sharply to 2.1% in 2026 and 1.8% in 2027 – rates rarely seen outside major crises such as the 2008 to 2009 financial ​crash or the COVID-19 pandemic.

Some economies could fall into outright recession, with Asian countries reliant on Middle East energy supplies expected to be hit hardest.

In the protracted disruption scenario, higher energy prices could add 0.4 percentage points to global inflation in 2026 and 1.3 percentage points in 2027, likely prompting central banks to hike interest rates by 0.5 to ​0.75 percentage points in the short term.

In the baseline scenario, the OECD forecast that inflation across G-20 economies would peak at 4% this year before ​slowing to 3.1% next year with interest rates largely on hold this year and cuts expected next year.

“Around one-third of OECD economies are projected to experience negative real ‌wage growth ⁠this year. Workers in these countries will see their living standards fall, which is the human reality behind the inflation numbers,” OECD Secretary-General Mathias Cormann said.

Global trade growth is set to moderate following a strong 2025, though robust demand for AI-related goods and investment, especially in Asia, should provide some support.

Uneven outlooks

In the baseline scenario, stronger energy exports are expected to support U.S. growth, partly offsetting the drag from higher prices on household ​purchasing power. Growth is projected to ​ease from 2.1% in 2025 to ⁠2.0% in 2026 and 1.8% in 2027.

In Europe, eurozone growth was seen slowing from 1.4% to 0.8% this year before rising to 1.2% next year as resilient labor markets and higher defense spending help offset government belt-tightening.

In ​Britain, growth is projected to slow to 0.9% this year before recovering to 1.1% in 2027 as global ​trade stabilizes and ⁠financial conditions ease.

In Asia, China was seen slowing from 5.0% growth in 2025 to 4.5% in 2026 and 4.3% in 2027 with ample energy reserves limiting exposure to oil price spikes. Exports are set to benefit from lower U.S. tariffs and a competitive tech sector, although a property slump remains a drag.

Japan is expected ⁠to be ​among the hardest-hit by trade disruptions linked to the Gulf conflict, with growth slowing from ​1.1% in 2025 to 0.6% in 2026 before edging up to 0.8% in 2027, a downgrade from March.

While subsidies will help cushion the energy shock, the OECD said Japan needs a “clear ​and credible” plan to rein in public finances over the medium term as interest rates rise.

Türkiye forecasts

The Paris-based organization also trimmed its 2026 growth forecast for Türkiye, citing weaker domestic demand amid high energy and commodity prices and tighter financial conditions, while leaving its 2027 outlook unchanged.

OECD cut its 2026 projection to 3.1% from 3.3% in March, and expects growth to rise to 3.8% in 2027.

“After some initial weakness in the first half of 2026, domestic demand is expected to pick up once the economic fallout from the Middle East conflict diminishes,” it noted.

As a net importer of energy and fertilizers, Türkiye remains exposed to higher prices, which will continue to weigh on inflation and the current account, and in turn could trigger currency depreciation and boost imported inflation, it added.

The OECD stressed that bringing inflation down remains the policy priority and requires sustained tight macroeconomic settings.

“Achieving rapid disinflation will require continuously tight monetary policy,” it said.

After easing earlier in the year, disinflation is expected to regain pace in the second half of 2026 and through 2027.

Consumer prices rose almost 4.2% month-over-month and nearly 32.4% on an annual basis in April, mainly driven by Iran war-linked pricing pressures.

According to OECD, headline inflation is projected to fall to 15% year-over-year by the end of 2027, supporting stronger private consumption and lifting growth.

Upside risks persist, including high energy prices and rising inflation expectations if policy action lags.

The OECD sees the interest rates likely remaining on hold amid high commodity prices, before decreasing to 20% by the end of next year.

At its last meeting, the Central Bank of the Republic of Türkiye (CBRT) held its benchmark one-week repo rate steady at 37%.

The bank said geopolitical risks and energy price volatility continued to pose uncertainty for inflation.

Separately on Wednesday, the European Bank for Reconstruction and Development (EBRD) cut its Türkiye growth forecast to 3.5% from 4% for 2026 and to 4% from 4.5% for 2027.

The EBRD cited rising energy imports, persistent inflationary pressures and Iran war spillover risks on tourism and manufacturing supply chains.

“Disinflation is costly and acts as a brake on the economy, but the cost of not addressing inflation would be much higher,” EBRD chief economist Beata Javorcik said.

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Türkiye eyes reaching $30 billion in annual trade volume with France by 2030, a senior official said on Wednesday during a two-day visit to the European country.

“In the past five years, Türkiye-France trade has increased by 71%, from $14 billion to $24.2 billion. At this rate, we could surpass $25 billion this year. Our goal is to reach a total trade volume of $30 billion by 2030,” Trade Minister Ömer Bolat said.

Bolat arrived in the French capital, Paris, on Tuesday for a two-day visit to France.

In Paris, Bolat met with members of the major French business association, MEDEF, and the World Turkish Business Council (DTIK) France members. He also had a bilateral meeting with Nicolas Forissier, the current Minister Delegate for Foreign Trade and Economic Attractiveness of France.

The minister was also expected to attend the Ministerial Council Meeting organized by the Organization for Economic Cooperation and Development (OECD) on Wednesday.

Speaking to Anadolu Agency (AA), Bolat said that the meetings they held in Paris were productive, touching upon the contacts with Turkish businesspeople in the country and in general Türkiye-France relations.

Drawing attention to the fact that there are about 800,000 Turkish citizens in France, Bolat said that France is the second country in the world with the largest Turkish diaspora.

“Therefore, the successes of Turks in France in education, arts, labor, business, services, industry, and transportation make us proud. As the government, we support them and stand by them for even greater achievements. We are genuinely and wholeheartedly interested in their issues,” he noted.

Bolat also mentioned that the meeting with MEDEF was attended by top executives of around 24 French companies that have invested in Türkiye, and continued: “We explained the potential for development in Türkiye-France relations and economic (potential). At the same time, we talked about Türkiye-European Union relations, debates on ‘Made in EU’, and how economic integration between Türkiye and the EU can be much stronger in general. They agree with us on this.”

Moreover, he suggested that the Customs Union between Türkiye and the European Union has created very strong and close ties between the economies and industries of the two countries, providing significant mutual integration and contribution. He added that they discussed the “Made in EU” topic with Forissier.

Moreover, he pointed out that the European Commission’s decision on March 4 to include Türkiye within the scope of “Made in EU” was very important and gratifying news.

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President Recep Tayyip Erdoğan said on Wednesday that the Middle East conflict and its fallout have reinforced Türkiye’s strategic importance in global energy supply.

Speaking at the inauguration ceremony for renewable energy projects completed in 2025, Erdoğan highlighted the country’s role as a regional energy hub and transit corridor.

Over three months into the war that started after the U.S. and Israel launched strikes on Iran, the world is facing a vast economic pain due to the severe disruption of energy supplies and other shipping.

A shaky cease-fire agreed in April still stands, but diplomacy to halt the conflict and reopen the Strait of Hormuz, a route that handled roughly a fifth of global oil and liquefied natural gas shipments before the war, is showing little sign of progress.

Erdoğan said recent developments had reaffirmed the significance of energy security for national economies and sovereignty. The crisis has “cemented Türkiye’s critical role in the global energy supply,” he noted, stressing that the impact of the war would continue to be felt.

Energy hub and crossroads

The effective closure of the Strait of Hormuz has caused what the International Energy Agency (IEA) says is the biggest energy supply disruption ever. Gulf oil producers ⁠have lost around 14 million barrels per day (bpd) of supply since the end of February.

On Tuesday, IEA warned that global oil inventories could hit critical levels ahead of the peak summer demand period if stock draws continue at their current pace.

Erdoğan said the conflict drove up prices of everything from oil, gas and LNG to petroleum-derived products, including fertilizers and plastics, while various restrictions implemented to curb energy consumption recalled the days of the COVID-19 pandemic.

“Türkiye’s role as a regional energy hub and crossroads is growing stronger by the day. It is very clear, especially in light of recent developments, that Türkiye is the region’s key player in the energy sector,” said Erdoğan.

He described energy supply security as not only a development issue but also a matter of sovereignty and national security, adding that the experiences of both the Russia-Ukraine war and the Hormuz crisis had underscored the need for diversified and secure energy sources.

The president said growing industrialization, urbanization and technological development would continue to increase global energy demand, pointing to projections that electricity consumption by AI-focused data centers could double within five years.

Türkiye’s electricity consumption rose 2.1% in 2025 from a year earlier, while demand is expected to increase by at least 50% by 2035.

Renewable ambitions

Erdoğan reiterated Ankara’s goal of reducing dependence on imported energy through greater use of domestic and renewable resources.

Imported sources currently account for about 57% of Türkiye’s energy supply. Its annual energy import bill stands at around $60 billion.

Türkiye currently ranks fifth in Europe and 11th globally in renewable energy installed capacity.

Under the National Energy Plan covering 2020-2035, Ankara aims to increase combined solar and wind power capacity from 40 gigawatts (GW) at the end of 2025 to 120 GW by 2035.

The expansion will require investments of around $80 billion and include the construction of a green transmission infrastructure to integrate additional renewable energy into the grid, Erdoğan said.

Plans also include development of 5 GW of offshore wind capacity by 2035.

Erdoğan said Türkiye’s total installed electricity capacity reached 125,410 megawatts (MW) by the end of April, with renewables accounting for 62.5% of the total. Solar power alone contributed 26,770 MW.

Renewable sources generated 43.3% of Türkiye’s electricity output by the end of 2025, up from 24% in 2005, when total electricity generation stood at 162 terawatt-hours (TWh). Total generation is expected to reach 363 TWh this year.

The president said 7,110 power plants entered service in 2025, representing investments of approximately $5.6 billion and adding 8,313 MW of installed capacity. Solar projects accounted for 6,063 MW and wind projects for 1,946 MW.

That marks a new record after $5 billion worth of 6,818 MW of installed capacity was added in 2024, said Energy and Natural Resources Minister Alparslan Bayraktar.

The new facilities are expected to generate 7.3 TWh annually and help avoid the need for 3.5 billion cubic meters of natural gas imports, saving an estimated $1.8 billion per year, Erdoğan said.

“We have avoided such a bill thanks to the investments we put into service today.”

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Türkiye has launched investigations into seven companies over allegations that they used automated software to secure Schengen visa appointments and resell them for profit, media reports said on Wednesday.

The issue has also become a topic of debate in Parliament, where lawmakers submitted questions regarding claims that visa appointments were being collected through bots and sold commercially.

Responding to inquiries, Trade Minister Ömer Bolat said Türkiye’s Advertising Authority had opened reviews into seven separate companies, according to the NTV broadcaster.

Authorities had received 143 complaints through the Presidential Communication Center (CIMER) and 10 applications via the e-Government platform concerning visa intermediary services over the past five years, Bolat said.

According to Bolat, complaints involving payments made to personal bank accounts through IBAN transfers and allegations of invoices not being issued have also been referred to the Treasury and Finance Ministry and the Foreign Ministry for further examination.

Last week, top tourism body said Turkish applicants were being effectively “shut out” of the Schengen visa application system, citing persistent appointment shortages and alleged technical manipulation of booking platforms.

Latest statistics showed Türkiye was the second-largest source of Schengen visa applications worldwide in 2025.

Applications to Schengen Area countries reached 11.93 million last year, an increase of 1.8% from 2024, according to European Commission.

Türkiye accounted for nearly 1.27 million applications, ranking second after China. The figure compared to 1.17 million in 2024 and just over 1 million in 2023.

The rejection rate for Turkish applicants stood at 14.6% last year, up 0.1 percentage points from 2024.

For years, Turkish citizens and businesses have complained about the EU’s visa system, including long appointment wait times, the issuance of very short-term visas and high rejection rates.

Turkish Travel Agencies Association (TÜRSAB) on Friday claimed that the appointment system is being exploited, alleging that limited time slots were rapidly captured by automated bot accounts and later resold at significantly higher prices.

Bolat said are currently no specific consumer protection regulations governing the pricing, refund policies or disclosure obligations of companies providing visa application intermediary services. He said authorities are evaluating whether additional regulatory measures are needed in consultation with relevant institutions.

Complaints over limited availability and the emergence of a black market for appointments have intensified in recent years.

Appointments are said to be obtained through unofficial channels and resold for between 300 euros and 500 euros, with prices reportedly reaching as high as 1,000 euros in urgent cases, TÜRSAB chair Firuz Bağlıkaya said.

Bağlıkaya said the shortage of visa appointments was preventing many Turkish citizens from even submitting applications.

“Limited appointments are opened unexpectedly, often late at night, on holidays or weekends, and are quickly blocked by bots,” he said, adding that the appointments are subsequently offered for sale at inflated prices.

Bağlıkaya said the European Commission data has “proven us right,” citing statistics that showed the number of Turks who were able to apply for a visa to Italy declined by 32.3%, while the number of applications to France also decreased by nearly 6%.

“These declines are the clearest indication that our citizens have been unable to find visa appointments,” he noted.

The debate has also drawn international attention.

An investigation coordinated by the global journalism network Lighthouse Reports and conducted with 14 media organizations across 12 countries examined the operations of a major visa outsourcing company with more than 4,100 centers in 168 countries.

The report alleged that applicants were pressured into purchasing unnecessary add-on services, including SMS notifications, VIP lounge access and premium packages. It also raised concerns about data protection practices, appointment hoarding through automated systems, document handling errors and inadequate staff training.

According to the investigation, some visa appointments allegedly secured through bots were resold on secondary markets via travel agencies, while certain corruption allegations were reportedly not disclosed to contracting governments despite contractual obligations.

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