Turkey sharply raises 2022 inflation forecast to 65%

Ankara, Sep 5 (IANS) Turkey sharply raised the country's inflation forecast for 2022 to 65 per cent, up from 9.8 per cent predicted one year ago, according to a government program published in the Official Gazette.

The new three-year Medium Term Program, which was jointly prepared by the Ministry of Treasury and Finance and the Directorate of Strategy and Budget, expects the country's inflation will fall to 24.9 per cent in 2023, 13.8 per cent in 2024 and 9.9 per cent in 2025, reports Xinhua news agency.

The latest inflation forecast from the program for 2022 indicated a big increase from the 9.8 per cent seen in the same report one year ago, although it was only slightly higher than the central bank's prediction in July that Turkey's year-end inflation would be 60.4 per cent.

The program estimates Turkey's economy to grow by 5 per cent in 2023, 5.5 per cent in 2024 and 2025.

Turkey's unemployment rates are expected to be 10.8 per cent in 2022, 10.4 per cent in 2023, 9.9 per cent in 2024 and 9.6 per cent in 2025, it notes, adding the country's foreign trade deficit is expected to reach $105 billion in 2022 and $80 billion in 2023.

The program predicts that an increase in production and productivity would limit price increases, among which the food prices would be reduced to single digits in three years, while the Turkish lira would become stable.

Turkey's economy grew by 7.6 per cent year on year in the second quarter. Its annual inflation hit 79.6 per cent in July, the highest level in 24 years.

Turkey is facing financial woes unseen in decades, with the Turkish lira keeping plunging since the outbreak of the Covid-19 pandemic in early 2020.

The Russia-Ukraine war that started in late February worsened Turkey's situation by pushing energy prices to new highs.

Despite high inflation, the country did not raise interest rates as many monetary authorities did to counter inflation.

Last month, the central bank shocked markets again with a 100-basis point cut of the interest rate to 13 per cent.