Turkey’s Economic Outlook and the Signs of an Approaching Election

Taxes and the Cost of Living

Turkey faces a difficult economic outlook, with a heavy tax burden, high interest payments, persistent inflation and declining investment. Even everyday products such as smartphones carry a substantial tax burden, while increases in fuel taxes are adding further pressure on household budgets.

The Government’s Medium-Term Programme

The government’s medium-term programme forecasts 71.6 trillion TL in tax revenues over three years, while 13.9 trillion TL is expected to go towards interest payments. The programme also targets lower inflation and higher per-capita income, but these targets contrast with rising public expenditure and limited improvements in household purchasing power.

The Burden on Lower-Income Households

Indirect taxes continue to place a disproportionate burden on lower-income households. Agriculture, industry and employment remain under pressure, while concerns over public spending, agricultural support and the growing cost of servicing public debt persist.

Are Elections Approaching?

The possibility of an approaching election raises questions about how the government might finance additional spending. The postponement of wage increases and pension bonuses could leave room for larger payments closer to an election, potentially helping to win public support.

Where Could the Money Come From?

The government also has access to several potential sources of funding, including public funds, the Unemployment Insurance Fund and the Turkey Wealth Fund. Increased pensions, minimum wages and other benefits could therefore become part of a pre-election spending programme.

Bridges and Motorways: Selling or Leasing Future Revenue?

Another development worth watching is the transfer of operating rights for major bridges and motorways to private companies. This is not necessarily an outright sale of the infrastructure itself, but rather a transfer or leasing of the right to collect future revenues. Such arrangements could provide substantial income to the state and give the government additional financial flexibility.

Whether these revenues would actually be used to finance election-related spending remains uncertain.

Election Economics Again?

Taken together, the possibility of increased pensions, minimum wages and other benefits, alongside new sources of public revenue, may point towards a return to election economics. However, these developments should be viewed as possible signs of political preparation rather than proof that an election has been scheduled.