Vision 2053: Türkiye unveils 12th Development Plan

The 12th Development Plan, the second under Türkiye's presidential system of government and spanning the years 2024-2028, has been officially submitted to the Speaker of the Turkish Parliament, having received the endorsement of President Recep Tayyip Erdogan.

The new plan, which aligns with the vision for the year 2053, will be unveiled by Vice President Cevdet Yilmaz at the Turkish Parliament's Planning and Budget Commission on Tuesday. The commission will hold further discussions on the Development Plan between October 23 and October 24.

With the new plan, the priority will be macroeconomic and financial stability, as well as balanced growth, along with a permanent improvement in the current account balance and strong public finance balance.

The primary focus will be on disaster-resilient living areas, leveraging Türkiye's economic and social gains, especially in the face of potential disasters. A robust R&D and innovation ecosystem will also facilitate a transition to a green and digital economy, to promote competitive production.

The plan's vision for the 2024-2028 timeframe aspires to create a “stable, strong, prosperous, environment-friendly and disaster resistant Türkiye, which produces high added value based on advanced technology and sustains fair income distribution in the century of Türkiye”.

Combating inflation

Fiscal policy will align with monetary policy throughout the new development plan period to combat inflation. The plan's focus is on enhancing growth potential by the efficient utilisation of Türkiye's resources.

Economic policies will continue to be conducted on a rule-based and predictable basis, strengthening coordination and harmony between monetary, fiscal and income policies. All policy tools will be resolutely used to achieve one of the main macroeconomic goals: single-digit inflation.

The functioning of a rule-based free-market economy will be supported by prioritising the addressing of market shortcomings, and improving the business and investment environment. Capital-strong and efficient small and medium-sized enterprises (SMEs) will be established with effective state support, and strong value chains will be formed with sustainable and secure input supply.

Foreign exchange earning areas in the services sector will also be diversified and increased, aiming to make Türkiye a global brand in tourism, and to position the sector as the third highest in terms of revenue in the international market.

A simpler, more effective and fairer system

By the end of the plan period, the aim is to create an additional 5 million jobs, leading to a lowering in the unemployment rate, from the current 9.2% to 7.5%, while achieving an average annual growth rate of 5%, and reaching a per capita income of $17,554. Türkiye’s average annual growth rate between 2018-2023 is projected at 4.5%, with a per capita income of $10,618 at the end of 2022.

Türkiye’s export for the first half of 2023 was $123.3 billion, and its import for the same period was $184.5 billion, with a current account deficit of 6% of the national income till end-2022. It is estimated that at the end of the new plan’s period, exports will reach $375.4 billion, imports will amount to $481.4 billion, and the current account deficit (as a percentage of the national income) will reach 0.2%, largely due to the targeted increase in income from tourism.

Public finance tools will support a growth environment compatible with inflation targets and the current account balance. In this context, rationalising expenses will continue through expenditure reviews and tax base expansion. Reforms to strengthen the justice system will be carried out, and the proportion of healthy and sustainable sources in financing expenditures will be increased.

Social security coverage is expected to expand through policies compatible with changes in the labour market and population structure, making the system simpler, more effective and fairer.

Istanbul Financial Centre

Efforts are underway to ensure that the Istanbul Financial Centre — a forward-looking initiative led by the Türkiye Wealth Fund, aimed at enhancing Türkiye's position in the global economy and establishing it as a regional financial hub — contributes more effectively to the deepening of financial markets, while enhancing its integration into the international monetary system.

Under the scope of the new plan, it is announced that capital-strong and efficient SMEs will be established with effective state support, and strong value chains will be formed with sustainable and secure input supply.

Cost reduction will be achieved through the common use of digital infrastructure and the consolidation of various operations in the financial sector. Measures will be taken to ensure that banks and non-bank financial institutions have equal access to the infrastructure they require.

Additionally, fintech companies engaged in participation-based activities will be supported, to create a finance ecosystem that encourages innovative, inclusive and dynamic participation within the Istanbul Financial Centre.

The goal is to increase the market value of companies listed on the stock exchange to 70% of the gross domestic product (GDP) by the end of the plan. It is also estimated that the total assets of participating banks will increase to 15% of GDP.

During the planning period, the strong and sustainable direction will be maintained in public finance, with the budget deficit expected to be 2% of the GDP at the end of the plan. Türkiye’s 2022 budget deficit was 1% GDP.

To meticulously craft the new Development Plan, 60 special expertise commissions and 27 working groups have been assembled. This comprehensive effort drew the participation of nearly 8,500 people in various meetings.

Input on the plan’s priorities was also sought from around 43,000 participants via an online citizen’s survey, capturing a wide spectrum of opinions and suggestions.

In formulating the plan’s text, the authorities benefited from decades of planning experience and the results of consultation meetings held with non-governmental organisations, academics and private sector representatives, as well as public institutions, including ministries.