Mehmet Şimşek gives date for decline in inflation: We will bring it down to single digits

The "Gulf Cooperation Council (GCC)-Turkey Economic Forum 2023", organized by the International Cooperation Platform and the Gulf Research Center, was held in Istanbul.

Treasury and Finance Minister Mehmet Şimşek gave a presentation at the opening of the event on areas of Turkey-GCC cooperation and the outlook for the Turkish economy.

Stating that there is economic complementarity between the Gulf countries and Turkey within the framework of increasing mutual cooperation, Şimşek noted the following:

"Thanks to its rich production diversity, Turkey possesses advanced capabilities in the manufacturing industry and is at a critical point for access to European and Central Asian markets. Gulf countries, on the other hand, have limited production diversity in the industrial sector despite their current account surpluses and strong infrastructure facilities. New models that will increase cooperation between the parties, such as free trade agreements, will contribute to the Gulf countries diversifying their production, the acceleration of mutual trade and investments, and the increase of sectoral potential, especially in tourism and construction."

In his presentation, Şimşek also provided information about the macroeconomic policies implemented in the Turkish economy and the structural reform agenda.

Drawing attention to investment opportunities in Turkey, Şimşek said:

"The Medium-Term Program (MTP) was prepared to ensure macro-financial stability, and we have made very significant progress in the last few months. We have a strong macroeconomic policy framework and a structural reform agenda. In response to the sound policies we are implementing, we see that investor confidence in Turkey has begun to return. Turkey's credit risk premium (CDS) has fallen from the 700 basis point levels in May to below 400 basis points. Turkey's risk premium has almost halved, meaning investor confidence is returning, which will lead to capital inflows. As we resolutely implement our reforms, we will attract more investors to our country and thus achieve permanent macro-financial stability. Our primary priority is to ensure price stability and reduce inflation to single-digit figures."

"WE WILL BRING INFLATION DOWN TO SINGLE DIGITS IN 2026"

Pointing out that the normalization process in monetary policy within the new policy framework, where the fight against inflation is prioritized, is supported by selective credit and quantitative tightening steps, Şimşek stated, "Following the transition period, the disinflation process will begin from the middle of 2024, and we will bring inflation down to single digits in 2026. Turkey has achieved significant success in reducing its budget deficit and public debt stock with the disciplined fiscal policies it has implemented in the past."

Referring to the earthquake disaster that occurred in February, Minister Şimşek assessed, "On the other hand, the measures taken to alleviate the impact of the earthquake disaster on our citizens have led to a temporary increase in the budget deficit. Savings and prioritization efforts are being carried out in budget expenditures, excluding expenditures made for the earthquake. In this way, it is aimed that the ratio of the budget deficit to national income will fall below the Maastricht Criterion of 3 percent by the end of the Medium-Term Program period."

Emphasizing that a balanced and sustainable growth path will be ensured in the coming period, where monetary, fiscal, and income policies will be implemented in coordination and where domestic and foreign demand contribute positively to growth, Şimşek said:

"A decline in the current account deficit is expected as a result of the steps taken towards rebalancing the economy, the normalization in gold imports, and natural gas and crude oil production activities. The continuation of strong tourism revenues will contribute to this process.

The ratio of the current account deficit to national income, which is expected to fall to 4 percent in 2023, is targeted to be 2.3 percent at the end of the program period. With the increasing confidence in our country, we see the reflection of the improvement in external financing opportunities in the strengthening reserves. In this recent period when global challenges are increasing, it is important to implement structural reforms to increase our country's resilience against shocks."

Treasury and Finance Minister Mehmet Şimşek emphasized that Turkey is a center that offers attractive opportunities to investors with its strong industrial infrastructure, young population, developed transportation network, geopolitical position close to large markets, and growth potential, and in this context, he pointed out that it would be beneficial for GCC member countries, which are trying to diversify their economies, to strengthen their cooperation with Turkey.

News Source: 12punto