Turkey’s economic leadership is facing a critical test as the government has officially doubled its inflation forecast, a stark admission that its battle against soaring prices is proving far more difficult than projected. The announcement has amplified a growing chorus of dissent from prominent business leaders, signaling eroding confidence in the new economic team’s ability to navigate the country through a "tough corner."
In a statement that sent ripples through the markets, Vice President Cevdet Yılmaz revealed a major revision to the country's crucial Medium-Term Program (OVP). The previous inflation target, a cornerstone of the economic recovery plan, has been abandoned. The new forecast acknowledges that inflation will likely be double the original goal, a significant blow to the credibility of the economic program helmed by the internationally respected Finance Minister, Mehmet Şimşek.
Şimşek’s appointment earlier this year was hailed as a return to orthodox, rational economic policies after years of unconventional strategies that fueled runaway inflation and a currency crisis. However, this public revision of the OVP underscores the immense challenge he faces in taming stubbornly high prices and re-establishing stability. The move is widely seen as a "zor viraj," or a difficult turn, for Şimşek, placing him under immense pressure to deliver results.
The government's struggles are not going unnoticed by the business community. A wave of criticism has emerged from some of Turkey’s most influential industrial and retail figures. Business tycoons Adnan Polat, Abdullah Kiğılı (of the Kiğılı apparel brand), and Vahap Küçük have all recently spoken out, expressing deep concerns about the economic trajectory and the impact of persistent inflation on production, investment, and consumer purchasing power. Their public criticism is significant, representing a departure from the usual quiet diplomacy between government and industry.
These concerns have been validated by capital markets expert Arda Sanger, who noted that the criticisms from Polat and Kiğılı reflect a deeper, global economic shift. Sanger argued that "capitalism is changing its shirt," suggesting that old economic models are no longer sufficient to address modern challenges. He pointed to signals from global financial giants like JP Morgan Chase as evidence that a new economic paradigm is emerging, one that Turkey’s leadership must grapple with.
The confluence of a major policy setback and public discontent from the business elite paints a worrying picture. While Şimşek's team continues to insist it is on the right path, the doubling of the inflation target is a clear sign that the road to recovery will be longer and more painful than hoped. For the Turkish economy, the alarm bells are ringing louder than ever.
Photo: Gemini AI