Türkiye Is Making the Defense Industry the Engine of Its Economy

Vice President of Türkiye Cevdet Yılmaz has presented the Medium-Term Economic Program for 2027–2029. Its main goals are to reduce inflation, ensure fiscal discipline, and stimulate investment, employment, and exports.

The government expects inflation to fall to 16% in 2027, to 9% – in 2028, and to 8% – in 2029. After peaking at 75.5% in May 2024, it fell to 31.5% in August 2026. By the end of 2026, the rate is projected to be 28.4%.

GDP growth is expected to accelerate from 3.3% in 2026 to 5% in 2029. Nominal GDP is projected to exceed $1.8 trillion in 2026 and reach $2.2 trillion in 2029.

Ankara also plans to expand its transportation infrastructure, diversify exports, and strengthen energy security. Investment in railways is expected to grow by 49%. Among the priorities there are the “Kars–Iğdır–Aralık–Dilucu” section as part of the Trump Route for International Peace and Prosperity (TRIPP), restoration of the Hejaz Railway, and construction of a high-speed railway across the Sultan Selim Yavuz Bridge.

A separate focus is on the reconstruction of regions affected by the 2023 earthquakes. By the end of 2027, more than $116 billion is planned to be allocated for this purpose, while spending on social housing is set to increase 2.5-fold.

The most significant increase is projected in defence spending. The Ministry of National Defense’s budget is expected to rise from $17 billion in 2026 to $31.66 billion in 2027, $37.58 billion in 2028, and $42.67 billion in 2029. In total, over three years, this amounts to approximately $111.9 billion. Additional funding will come through the Defence Industry Support Fund and other defence industry programs.

The funds will be directed, in particular, toward KAAN fighter jets, Altay tanks, Bayraktar TB3 UAVs, Steel Dome air defense and missile defense systems, and the KIZILELMA unmanned combat aircraft. ASELSAN also plans to ramp up production of radars, electronic warfare equipment, and command-and-control systems in 2026. Its contract portfolio totals approximately $6.5 billion.

The program demonstrates that Ankara views the defense industry not only as a component of national security but also as a driver of technological development and exports. The increase in government orders is expected to speed up  the localization of production and the development of domestic supply chains. At the same time, Türkiye will maintain cooperation with Western and Asian partners, using defense contracts to attract technology and strengthen its position abroad.