Annual Presidential Program for 2025 Released
Forex - The 2025 Presidential Annual Program has been published.
The "Decision on the Approval of the 2025 Presidential Annual Program," prepared by the Presidency, has been published in the Official Gazette's duplicate issue. According to the program, it is forecasted that with the continuation of an approach prioritizing the establishment of a sustainable and balanced growth composition, the Turkish economy will grow at a rate of 4.0% in 2025 without creating demand-driven inflationary pressure. By maintaining the stable and healthy structure of the economy, it aims to ensure strong, inclusive, and employment-supporting growth through continued practices that consider macroeconomic balances, with monetary, fiscal, and revenue policies being implemented in full coordination.
The program continues as follows: "Additionally, concentrating public investments in efficient sectors, promoting high value-added production in the industry and services sectors, implementing policies to reduce energy dependency, and developing renewable energy sources are among the primary goals. By increasing investments in the areas of digital transformation and green economy, it aims to enhance global competitiveness and ensure environmental sustainability.
With the continuation of a growth composition that balances domestic and external demand, prioritizing increased employment and private sector investments is essential. These developments will facilitate significant contributions from the industrial sector to economic growth in 2025. Furthermore, maintaining the vitality of economic and social activities, along with the contributions from the tourism sector, will continue to support GDP growth in the services sector. During this period, it is also expected that the agricultural sector will contribute to GDP growth similarly to long-term averages."
The program indicated that with the continuation of the disinflation process starting from June 2024, the annual increase in consumer prices is targeted to reach 17.5% by the end of 2025.
-Employment- In 2025, it is expected that employment will increase by 532,000 compared to the previous year within the framework of the projected growth rate. The labor force participation rate is expected to increase by 0.5 percentage points, reaching 55.0% in 2025.
For the entire year, with the effects of labor force participation and population growth dominating, the unemployment rate is predicted to be 9.6%. It is expected that private and public sector consumption expenditures will increase in real terms by 3.4% and 2.3%, respectively, compared to the previous year. During this period, real private sector fixed capital investments are predicted to increase by 3.5%, while public sector fixed capital investments are expected to increase by 3.7%. Thus, total fixed capital investment expenditures are anticipated to rise by 3.5% in real terms.
In the GDP growth of 2025, private consumption expenditures are expected to contribute 2.6 percentage points, while private sector fixed capital investment expenditures are predicted to contribute 0.8 percentage points. During this period, the contribution of public sector fixed capital investment expenditures to growth is expected to be 0.1 percentage points. The net contribution of goods and services exports to GDP growth is projected to be 0.2 percentage points.
It is predicted that the ratio of public disposable income to GDP will increase by 0.1 percentage points, reaching 11.1% in 2025. During this period, public savings are expected to be at 1.0% of national income, while public investments are anticipated to be at 3.2%.
The program provided the following information: "It is expected that in 2025, the ratio of private savings to GDP will increase by 0.2 percentage points compared to the previous year, reaching 26.8%, and private investment expenditures will increase by 1.7 percentage points to 26.6%. As a result, the difference between private sector savings and investments is expected to be 0.3% of GDP. Consequently, the ratio of total domestic savings to GDP is anticipated to reach 27.8%, while the total savings-investment gap is expected to be negative 2.0%."
-Balance of Payments- According to the program, within the framework of the disinflation process in 2024, following a weakening of domestic demand, the level of imports decreased, while there was a moderate increase in exports due to a rising trend in global trade volume and partial recovery in external demand. The surplus in the services balance continued to increase moderately due to the ongoing rise in travel revenues. As a result of all these developments, a significant recovery trend was observed in the current account balance. Despite fluctuations in commodity prices, energy imports remained stable throughout the year, while gold imports showed a decreasing trend compared to last year's historical highs.
The program continued as follows: "In the remaining months of the year, fluctuations in commodity prices resulting from geopolitical tensions and domestic demand trends will be decisive for the current account deficit. Looking at projections regarding the global economic outlook, it is expected that external demand conditions will support our export growth in the coming period. Additionally, through steps to be taken under the twin transformation agenda, the potential of trade in services will be effectively utilized, leading to higher levels of goods and services exports.
In 2025, despite the continued upward trend in exports, an upward trend in imports is expected due to the acceleration of economic activity. In this context, it is anticipated that the current account deficit will increase somewhat in 2025, while in subsequent years it will gradually decrease to sustainable levels. Applications to reduce import dependency will continue to be implemented in line with macroeconomic targets to ensure sustainable current balance.
It is forecasted that exports (fob) will increase by 5.9% to reach $279.6 billion, while imports (cif) will rise by 7.0% to reach $369.0 billion, resulting in a foreign trade deficit of $89.4 billion.
During this period, export and import prices are expected to increase by 1.2% and 1.5%, respectively, while real exports and imports are predicted to rise by 4.6% and 5.3%, respectively.
In 2025, travel revenues are anticipated to reach $56.1 billion, with the services balance generating a surplus of $55.3 billion. A deficit of $11.9 billion is expected in the primary income balance, while a surplus of $0.9 billion is anticipated in the secondary income balance.
Under these assumptions, the current account deficit is expected to reach $28.6 billion in 2025, resulting in a current account deficit ratio of 2.0% of GDP."