(MENAFN) Hakan Aran, the head of private lender Isbank, has outlined a challenging economic outlook for Türkiye, predicting that full stabilization and relief will only be achieved by 2026, once inflation is brought under control. In an interview with Anadolu to mark Isbank's 100th anniversary, Aran highlighted that Türkiye has implemented significant monetary tightening measures in the first half of the year. The focus has been on achieving price stability and reducing inflation, with the effects of these measures becoming increasingly apparent.

Aran noted that the current economic environment is marked by a decline in production, demand, and employment. This has been reflected in confidence indices, with the seasonally adjusted real sector confidence index falling below the 100 threshold for the first time since 2020, indicating deteriorating expectations. Other confidence measures, including those for consumers, the service sector, retail trade, and construction, have also shown ongoing declines. He warned that the pursuit of price stability and inflation control will come at a cost, impacting growth, employment, production, and exports.

For the current year, Aran expects Türkiye’s economic growth to be around 3.5 percent, a cooling down from the 4.5 percent expansion posted in 2023. He stressed the need for a multidimensional approach to addressing economic challenges while avoiding actions that could harm the production and export-based economic model. This approach, he suggested, is crucial for returning to a more stable economic environment.

Regarding the Central Bank's monetary policy, Aran speculated that no immediate action would be taken in October. Instead, he anticipated that the Central Bank would signal potential interest rate cuts in the future. He projected that if annual inflation trends consistently fall below the policy rate level, there could be an opportunity for a reduction of 250 basis points starting in November. This would potentially bring the policy rate down to 45 percent by the end of the year and 25 percent by the end of the next year.

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