Türkiye aims to continue its disinflation process without interruption despite a higher-than-earlier-expected inflation projection in the near future due to the fallout from the Iran war, according to its updated economic blueprint.

The 2027-2029 Medium-Term Program (MTP), unveiled Sunday, projects a year-end inflation forecast of 28.4%, compared to 16% estimated last year.

Officials said the war in the Middle East had played a key role in the upward revision of the inflation outlook.

The direct and indirect effects of the conflict on inflation have been estimated at approximately 7 percentage points, according to the Central Bank of the Republic of Türkiye (CBRT).

Türkiye’s annual inflation rate eased to 31.51% in August from 31.75% in July, according to official data. The decline had stalled following a sharp rise in energy prices caused by the Iran war.

Inflation is projected to fall to 21% in 2027, 13.5% in 2028 and 9% in 2029, according to the MTP.

The program identifies breaking inflation inertia and restoring price stability by bringing inflation back to single-digit levels as a key objective.

To achieve this, it says monetary, fiscal and income policies will remain closely coordinated, while demand conditions will be kept on a non-inflationary path.

The contribution of domestic demand to the decline will be supported by more favorable cost conditions, while policies aimed at strengthening competition in product markets and increasing supply-side capacity will seek to raise Türkiye’s production potential.

The government also expects lower inflation and a more balanced income distribution to contribute to a lasting increase in welfare.

The CBRT will continue to use all available policy tools effectively until price stability is firmly established, the program said.

Breaking inflation inertia

The central bank will continue to implement an inflation-targeting regime and a floating exchange-rate regime as part of the fight against inflation.

Exchange rates will continue to be determined by supply and demand under free-market conditions, while communication channels will be strengthened to help anchor inflation expectations in line with official targets, the program says.

The government also plans to increase public awareness of the “Market Prices” website, which publishes prices from major supermarket chains, in an effort to improve market transparency.

The program calls for a broad shift away from backward-looking price-setting based on past inflation toward pricing based on expectations.

It also aims to reduce price rigidities and prevent persistent inflation inertia. Administered and regulated prices will be brought into greater alignment with inflation forecasts and targets.

Food price stability

The government plans to strengthen food supply security and price stability by taking a broader approach to agricultural production and food markets.

Prices paid for agricultural products will be determined with consideration for their impact on public finances, market dynamics and program targets, while seeking to reduce the practice of indexing prices to past inflation.

Short- and long-term changes in supply and demand for food and agricultural products, as well as import and export developments, will be monitored through an early-warning approach.

Production planning for strategic agricultural products will continue to take into account supply-demand balances, self-sufficiency levels, water constraints and regional production potential, the program said.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The United Arab Emirates (UAE) is building ​alternative routes for its energy exports and trade to ensure they are ⁠not “held hostage” by ⁠the ongoing Iran war, a top official said Monday.

The conflict ​has significantly impacted the oil-rich ​Gulf Arab states, ⁠including the UAE, as Tehran fired missiles at the country and attacked its oil tankers in the Strait of Hormuz.

“Our energy exports will not be held hostage, nor will our trade and economic activity,” UAE presidential adviser Anwar Gargash told the Hili Forum in Abu Dhabi.

The UAE has been expanding port capacity along its eastern coast, as well ⁠as ⁠pipelines, railways and trade routes for alternative corridors, he said.

Gargash added that while relations with Iran could be restored, rebuilding trust with its neighbors after the attacks may take decades.

“A functional relationship with Iran can and must be restored, but rebuilding trust is another matter,” Gargash said.

The ⁠UAE, a critical economic lifeline for Iran, had suspended all financial and economic transactions with the country in August, ​citing military escalation by Tehran and missile threats.

Gargash also ​criticized the Gulf Arab states for their response to the Iranian attacks, saying their ⁠collective ‌action fell ‌short.

“For many years we broadly agreed ⁠on the nature of ‌the challenge posed by Iran,” he said.

“The problem was therefore ​not a lack ⁠of understanding. Where we fell short ⁠in confronting this historic challenge was translating this shared ⁠understanding into a ​sufficiently united and strategic response.”

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

British luxury carmaker Jaguar Land Rover announced a voluntary redundancy program Monday after months of turmoil caused by a cyberattack and U.S. President Donald Trump’s tariffs on the auto sector.

British media reported that up to 4,000 roles could be removed, equivalent to around 10% of JLR’s global workforce of more than 40,000 people, according to its website.

The vast majority, around 34,000 staff, are based in the U.K.

“As we deliver the next phase of our strategy, we need to adapt to evolving global market conditions while targeting approximately 1.7 billion pounds ($2.3 billion) of savings over the next two years,” JLR said in a statement.

“We have informed our colleagues and trade union partners that JLR is opening a voluntary redundancy programme offering salaried and management team members the opportunity to leave the business,” it said.

JLR said it would provide further detail later Monday, and U.K. Business Minister Jonathan Reynolds is scheduled to meet with the company’s management this week.

Reynolds told ⁠the BBC that while he wanted to mitigate job losses, the business environment for ​carmakers was “challenging” in the U.K. ​and across ⁠Europe.

“If this is about making sure over time that the workforce is right to make the business as competitive as possible, that’s the conversation we need to have,” Reynolds said Sunday.

The job cuts would be a setback for Prime Minister Andy Burnham, who took office six weeks ago, and has repeatedly ⁠said he wants to “reindustrialize” Britain.

The restructuring comes one year after a major cyberattack halted JLR’s production in Britain and severely affected its finances.

Owned by India’s Tata Motors, JLR was forced to halt production for more than a month, costing the company 196 million pounds.

Hit also by U.S. tariffs, the carmaker posted a loss of 244 million pounds for its fiscal year ending in March, compared with a net profit of 1.8 billion pounds in 2024-25.

“We must further simplify our organisation, improve efficiency, and build greater resilience,” JLR said in its statement.

Seeking to move on from the cyberattack, the company last week opened orders for its new fully electric Range Rover.

It comes as European carmakers are facing increased pressure for their vehicles from Chinese manufacturers as the industry shifts toward electric vehicles.

German car giant Volkswagen said Thursday that its management and unions had agreed to axe a total of 100,000 jobs by the end of the decade, the biggest-ever restructuring in the global auto industry.

The company said it had approved a plan involving the reduction of around 50,000 jobs, on top of another 50,000 already agreed.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Focusing on the disinflation process and ensuring price stability alongside sustainable growth remains the top priority, Vice President Cevdet Yılmaz said on Sunday while unveiling the new road map for the Turkish economy, covering the 2027-2029 period.

“The main point is to resolutely continue the disinflation process and permanently establish price stability,” Yılmaz said while presenting the new Medium-Term Program (MTP) for the 2027-2029 period.

Speaking in Ankara, Yılmaz said that the government revised its growth forecast for 2026 to 3.3% from an earlier 3.8% and that it expects inflation to end the year at 28.4%.

“We expect inflation to start declining again in the fourth quarter of 2026 and to reach 28.4% by the end of the year,” he said in a televised address.

Under the new program, inflation is projected to fall to 21% in 2027, 13.5% in 2028 and 9% in 2029, the vice president also said.

Türkiye’s annual inflation rate eased to 31.51% in August from 31.75% in July, according to official data.

Yılmaz said the war in the Middle East had played a key role in the upward revision of the inflation outlook.

“According to our central bank, the direct and indirect effects of the war on inflation have been estimated at approximately 7 percentage points,” he said.

The vice president also said the government had made “significant progress in combating inflation,” which remains the top priority of its economic program.

“Inflation, which had risen to 75.5% in May 2024, has begun to show a clear downward trend as a result of the policies we have implemented,” he said.

Starting his speech, he reflected on the holistic approach and involvement of the ministries when forming the road map, which constitutes the main policy framework, as he shared key targets and forecasts for the upcoming period.

Global risks

“The global economy is going through a new period in which economic, technological and geopolitical developments have become increasingly intertwined, predictability has declined, and risks have reached historically high levels,” said Yılmaz.

“The Turkish economy is, of course, not independent of developments in the world or in our region,” he added.

He went on to say that the direct and indirect effects of the war in the region “are being felt across many areas, from energy and commodity prices to global trade, and from the inflation outlook to growth expectations.”

In line with this, he said that the assumptions used last year had been updated in light of developments during the year, particularly due to the war in the region.

Türkiye, as an energy-importing country, has been exposed to the increase in oil and gas prices, which have risen sharply this year following the outbreak of the U.S.-Iran war.

“The global growth forecast, one of the main assumptions in the previous MTP, was revised down from 3.1% to 3%. The growth forecast for our trading partners declined from 2.4% to 1.6%, while growth in the euro area fell from 1.2% to 0.9%,” he said.

Growth at 3.3% this year

Furthermore, he shared the revised figure for the Turkish economic growth this year, suggesting it is expected to come in at 3.3% before recovering next year and in the years after.

“We revised our 2026 growth forecast to 3.3%. Our industrial growth forecast was reduced to 2.3%, while our year-end inflation forecast was raised to 28.4%,” Yılmaz noted.

“Due to the direct impact of higher energy prices on our external balance, our energy import forecast increased from $63 billion to $71 billion, while our forecast for the foreign trade deficit rose from $96 billion to $105 billion,” he also said.

“Accordingly, we also revised our forecast for the current-account deficit as a share of GDP (gross domestic product) to 2.6%,” he further said.

“Our tourism revenue forecast was also revised downward from $68 billion to $65 billion due to the effects of the war,” he added.

Still, Yılmaz said that these revisions “do not represent a change in the direction or main framework of our program.”

He referred to the long-term goal of price stability, which Turkish authorities have been pursuing since the middle of 2023 with the return to more conventional macroeconomic policies.

“Despite this, the Turkish economy continues to produce, grow and create employment,” said the vice president.

He continued by also pointing out that expectations for 2027 point to a renewed recovery in the global outlook and consequently easier conditions for trade and stronger growth for Türkiye as well.

He also said that officials were closely monitoring the risks amid the geopolitical tensions.

“We are closely monitoring these developments and the additional risks they may create, taking measures to limit their effects and conducting our economic policies with an approach that takes different scenarios into account and strengthens resilience against external shocks,” Yılmaz said.

‘Program producing concrete results’

At the same time, he cited the gains of the economic program so far.

“Within the framework of the policies we have implemented, confidence in the Turkish lira has continued to increase,” he suggested.

“The rise in the share of TL deposits in total deposits from 31.6% to 61.5% as of Aug. 28 has been a concrete indication that the policies we have been pursuing are right,” he maintained.

He also recalled that the exit from the KKM scheme, a form of contingent liability, had been completed without disruption and said that despite uncertainties in the global economic outlook and geopolitical risks, “our gross reserves have increased by $89.7 billion to reach $188.2 billion as a result of the policies we have implemented with determination.”

“This strong increase in reserves supports the resilience of our economy against external shocks,” he added.

“Despite geopolitical tensions, our risk premium has also declined significantly, falling from levels in the 700s to below 220 (points),” Yılmaz said.

Similarly, he pointed out that annualized exports have reached $280 billion as of August, while underscoring the improvement in the composition of the exports, with the share of medium- and high-tech exports on the rise.

However, due to rising energy and commodity prices, there has been a “temporary pressure” on the external balance, Yılmaz said.

“The current-account deficit as a share of GDP was 1.8% in June 2024 and 1.6% in June 2025. As of June 2026, this ratio had risen to 2.3%. We calculate that 0.7 percentage points of this increase was attributable to the war,” he maintained.

Growth, unemployment figures

In addition, the vice president shared the expectations for growth and unemployment figures in the new 2027-2029 period.

He said that the growth is expected to rebound to 5% in 2029 after hitting 4.2% in 2027 and 4.6% in 2028, adding that the goal is to have “balanced and sustainable growth.”

He also conveyed the projections of the unemployment rate reaching 8.1% this year before falling to 8% next year, 7.8% in 2028 and 7.6% in 2029.

Yılmaz also stated that they aim to gradually reduce the budget deficit and continued: “Last year, we projected a budget deficit of 3.5% of national income for 2026, and with the measures we have taken, we expect to achieve it at 3.1%.”

Among others, he also said they expected the Turkish economy to reach $1.8 trillion in size by the end of this year for the first time.

The program foresees a national income exceeding $2.2 trillion and per capita national income reaching $25,000 by 2029.

It also aims to create more jobs through economic growth and reach $450 billion in exports when goods and services combined. In terms of employment, the program aims to create approximately 2.1 million additional jobs.

Its other objectives include increasing production capacity and productivity, strengthening the competitiveness of the industry through policies such as green transformation, and supporting high-value-added production and exports.

Yılmaz also wished the program to be auspicious for the country.

The unveiling of the program was attended by other top officials, including Treasury and Finance Minister Mehmet Şimşek and the governor of the Turkish central bank, Fatih Karahan.

Türkiye’s flag carrier Turkish Airlines (THY) aims to become one of the top 100 most valuable brands worldwide, making it the first Turkish firm and potentially the first airline to do so, according to its chief executive.

The carrier aims to prioritize value-driven growth alongside volume-driven growth to reach this goal, CEO Ahmet Olmuştur, who earlier this year assumed the role, told Anadolu Agency (AA).

Building brand value is a unique endeavor for each firm and is seen as a long-term process.

“We’ve created some 122 touchpoints to interact with passengers, starting from visiting our website and continuing with the check-in and boarding at the airport, as well as with in-flight experience, baggage delivery, and other subsequent customer relations processes – these make up integral parts of customer experience and are the most important criteria in our strategy,” he said in the recently published interview.

The carrier held the title of Türkiye’s most valuable brand for nine consecutive years, reaching a record valuation of $2.9 billion last year, and the airline invested in product diversification to elevate its global standing to extend its success at home to the rest of the globe with the upcoming launch of a Premium Economy class.

“We will offer passenger seats with a greater recline angle and more legroom, alongside an enhanced in-flight dining experience and additional benefits through the Miles&Smiles loyalty program,” Olmuştur said, noting that the airline is targeting 2029 for the widespread rollout of the program as efforts are underway to reassess its fleet.

In addition to cabin upgrades to accommodate the new package, Turkish Airlines initiated a tender process in July to acquire regional aircraft, with integration expected to be in the second half of 2028.

“The fleet expansion will allow connecting a daily passenger count of 100-140 to Istanbul and transport our passengers to other destinations in our flight network via the megacity, thereby strengthening the importance of the IGA Istanbul Airport as a leading hub,” he said.

Plans are underway to increase the number of long-range high-capacity aircraft with a focus on models boasting 400 seats.

The carrier already boasts the world’s highest operational efficiency for its Airbus A350 and Boeing 787 Dreamliner fleets in 2025-2026.

One of Turkish Airlines’ Airbus A350s, named TC-LGP, logged an industry-leading average of 17 hours and 20 minutes of daily flight duration last year.

“We aim to ensure the effective use of our aircraft by maintaining the highest standards of safety, maintenance, and operational requirements,” he noted.

Olmuştur stated that route expansion efforts continue to drive the flag carrier’s market share as the airline attracted 1.2 million first-timers over the past year, while its footprint in Asia grew with new flights to Chengdu, China, set to launch on Nov. 11, complementing its existing schedules of 14 weekly flights each to Beijing, Shanghai, and Guangzhou.

He also mentioned that flights to the Belarusian capital of Minsk will resume on Sept. 20.

Meanwhile, Turkish Airlines is also expanding its logistics efforts with redirecting its cargo capacity toward high-demand markets with limited supply to maximize revenue.

“We’re closely monitoring the price balance in the market, allowing us to use our capacity more efficiently and generate further revenues,” he noted.

Olmuştur stated that technological integration remains a priority at Turkish Airlines, with the flag carrier’s TK Assistant, an application powered by artificial intelligence, handling over 2 million passenger inquiries in over 100 languages in its first seven months since rollout.

He mentioned that Turkish Airlines, as the carrier flying to most countries worldwide, aims to capture a broader share of the tourism market with its dedicated platform, Turkish Airlines Holidays, beginning by awarding additional status miles on travel packages starting as of Sept. 1.

These efforts aim to further bolster the Miles&Smiles loyalty program, which recently exceeded 25 million members.

“The program reached a scale that can no longer be described as a simple frequent-flyer program,” he said.

“We gathered at the IGA Istanbul Airport with 100 of our passengers who have flown the most consistently since the program launched and have forged very strong bonds with our brand over the years.”

Olmuştur added that he began his career at a Turkish Airlines call center in 2000, noting that capturing employee insights is one of the brand’s priorities to make continuous improvements.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

A set of recent economic data brought U.S. President Donald Trump and his Republican Party some good and bad news ahead of the midterm elections, with the labor market posting strong growth, but record-high diesel prices likely to add more pressure on the inflation outlook.

Employment in the U.S. grew by 162,000 jobs in August, and the unemployment rate remained steady at 4.1%, the U.S. Bureau of Labor Statistics (BLS) said.

But the price of diesel, used for road hauling, agriculture and construction also hit a new record on Friday.

The cost of a gallon of diesel is up 55% since the Iran war began in late February, according to the AAA motorists’ association.

Stock markets were down on the employment figures, with all eyes on the next interest rate-setting meeting by the Federal Reserve (Fed) later this month.

Strong job growth indicates a healthy labor market, which would allow the central bank to focus on its other mandate: keeping long-term inflation to its 2% target, potentially by hiking interest rates.

The Fed has missed that target for more than five years, with consumer inflation running at 3.3% in July. August data is due this week.

Price rises have been fuelled by Trump’s war on Iran, which has sent energy costs skyrocketing and his signature tariff policies.

Overall inflation hit a three-year high in May, but has dropped since then.

Several Fed policymakers have indicated that they would be open to raising interest rates if August’s data does not show a continuing downward trend.

Three of the committee’s 12 voting members dissented at its last meeting in July, calling for an immediate hike.

Responding to the August jobs data, Trump made a surprising link Friday between the Fed’s setting of interest rates and Washington’s trade ties with other countries.

“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” Trump posted on his Truth Social platform.

“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

He also railed against the stock markets being down due to expectations of a Fed rate hike, saying they were living in a “false reality that if things are good, you’ve got to ‘KILL IT’ because of a ‘fear’ of Inflation.”

Later, Trump told reporters that “success does not cause inflation. Stupidity causes inflation.”

He renewed his call for the Fed to lower interest rates, saying the key rate should be between 0.5% and 1%. The rate is currently between 3.5% and 3.75%.

‘Heating back up’

The job report showed that U.S. employment expanded in the restaurant and bar sectors, and jobs in public schools bounced back from a contraction a month earlier.

The strong report also revised up job numbers for June and July by a combined 55,000, indicating the U.S. labor market remains in a state of steady growth.

Average hourly earnings increased by 3.1% year-over-year, still lagging behind inflation, indicating many workers are seeing their salaries contract in real terms.

Diane Swonk, chief economist at KPMG, told Agence France-Presse (AFP) that the August data was “reassuring” but cautioned that “one month does not a trend make.”

“This report does suggest that the labor market is heating back up,” she said.

“The labor market is now stronger, and this is worrisome for the Federal Reserve because now you have demand along with supply shocks.”

Still, strong job growth was “welcome news for workers out there. Welcome news for people trying to make ends meet.”

The health care sector, one of the major drivers of U.S. job growth as the population ages, expanded at a slower pace than its average over the last year.

Kathy Bostjancic, chief economist at Nationwide, said the overall “across-the-board robust gains” were encouraging.

“Today’s report supports our forecast that real GDP growth accelerates to at least three percent in Q3, reflecting a strong labor market, resilient consumer spending, and continued ebullient AI investment,” she said in a note.

The information technology sector lost 23,000 jobs, with analysts saying it is more exposed to AI-related layoffs due to wider adoption of the technology than other industries.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.