Next year will mark a "turning point" for the Turkish economy, with major structural reforms taking hold, earthquake-related costs largely absorbed and the impact of the government's anti-inflation drive becoming more visible, Vice President Cevdet Yılmaz said on Wednesday.
"2026 will be a year in which important reforms and structural transformations are implemented. It will be a year when the effects of the earthquake are largely overcome and when we feel the results of our fight against inflation much more strongly. It will be a positive turning point," Yılmaz told reporters in Baku, where he was meeting journalists alongside Trade Minister Ömer Bolat.
Annual inflation in Türkiye cooled to 31.1% in November, the lowest level in four years. The government is targeting inflation below 20% by the end of 2026 and a return to single-digit inflation in 2027.
The Turkish central bank's end-2025 interim inflation target stands at 24%, with a forecast range of 31%-33%.
The bank expects inflation to fall to its 16% interim target by the end of 2026, with a projected range of 13%-19%.
Yılmaz said recent data supported the government's disinflation narrative, while warning that perceptions and misinformation could undermine economic stability.
"Perceptions have become detached from facts. A climate created on social media can have serious effects on economic policy, especially through expectations," he said, citing the concept of "self-fulfilling prophecy."
"Inflation has been going quite well for the past two months," Yılmaz said. After a surprise rise in September due to agricultural prices and private education costs, inflation had returned to its downward trend, he said.
According to Yılmaz, leading indicators point to a favorable December. "We expect to close the year slightly above 30%. When January inflation is announced on Feb. 3, we expect to see inflation fall below 30%, into the 20s," he said.
"By the end of next year, we are targeting inflation below 20%. We are acting within a determined policy framework to reduce inflation back to single digits in 2027."
Yılmaz said the 2026 budget would be a key milestone, with Türkiye set to record a primary surplus for the first time in several years.
"We will register a primary surplus for the first time in next year's budget," he said. "We have had primary deficits for the last two to three years. In other words, we had to borrow a certain amount just to pay our debts and interest. As is known, this creates a negative spiral. From next year, we are beginning to break that negative cycle."
The budget deficit is forecast at 3.5% of gross domestic product (GDP) next year, falling below 3% when earthquake-related spending is excluded, Yılmaz said, adding that fiscal assumptions had been set conservatively to avoid the need for supplementary budgets.
The government had estimated a deficit of 3.6% for this year, but Yılmaz said it's likely to come in below that figure.
On the global trajectory, Yılmaz said trade is being shaped by new logistics and supply chains, as countries prioritize bilateral ties and regional integration. In this context, he identified three transport corridors as critical for Türkiye's long-term competitiveness.
The first is a north-south rail and motorway route through Iraq that would give Türkiye direct access to the Gulf. "This line, which cuts across Iraq from north to south, stands before us as a very important commercial route that allows Türkiye to reach the Gulf," he said.
He also highlighted the proposed Zangezur Corridor, linking Türkiye directly to Central Asia and the Turkic world. "Zangezur is a very critical opportunity for us to establish a direct connection with the Turkic world and Central Asia," Yılmaz said, adding that the project should be viewed not only as a transit route but as a development corridor for eastern and northeastern Türkiye.
A third opportunity, he said, had emerged from changing conditions in Syria, including the potential rehabilitation of the historic Hejaz railway.
"We are talking about a railway line stretching from Gaziantep to Aleppo, Damascus, Jordan and the Hejaz region. Railways are becoming increasingly important globally in economic terms," he said, acknowledging that the infrastructure would require significant repairs.
Yılmaz went on to recall that Türkiye will host next year's U.N. climate summit, COP31, in Antalya.
"Türkiye will host global discussions on climate and ecology. This will be a major summit, with weeks of meetings and side events," he said, adding that green transformation and green finance would be central themes.
"Türkiye must benefit more from green finance, whether in water management, energy, or industrial transformation," Yılmaz said. Hosting the summit would also provide a boost to tourism outside peak season, he added.
Its unique position allows Türkiye to bridge perspectives between developed and developing countries, according to Yılmaz. "We can understand both how developed countries look at these issues and how developing countries see them. That is why we believe these debates can be held in a more balanced way in Türkiye."
