Minister Şimşek on 'inflation': It will take time to fall to single digits

Treasury and Finance Minister Mehmet Şimşek, speaking at the "Global Investment Days" event organized by the International Investors Association (YASED) in Ankara, said that the Turkish economy is a major economy that cannot be ignored.

"WE HAVE A STRONG STRUCTURAL REFORM AGENDA"

Touching on factors that will affect growth in the medium and long term, Şimşek explained that protectionism and fragmentation in trade are pulling global growth downward. Pointing to artificial intelligence and structural reforms as factors that will drive growth upward, Şimşek continued: "We have a very strong structural reform agenda. From strengthening human capital and improving the investment environment to deepening capital markets, reform in public finance, green transformation, and digital transformation. The purpose of all these is to make Turkey more competitive and efficient and to increase potential growth. When you look at the structural reform agenda from another perspective, it is about strengthening the rule of law. Political stability is already here. Accountability, improvement of institutional capacity, and regulatory quality have come to the agenda. We are as sensitive as you are on all these issues and we are working on them."

Stating that they consider improving the investment environment as a separate heading and that this is an important issue in its own right, Şimşek emphasized the importance of integrating into the global economy. Şimşek said, "If we can continue this reform agenda in the way we are currently implementing it, we will have an additional 4 points of output increase in national income within 2 years and an additional 8 points within 4 years, according to global norms."

Pointing out that transformation in industry is one of their priority issues, Şimşek stated, "Global academics say that Turkey can play a leading role in achieving green transformation in the world. Improvement in the innovation index continues. We are in 39th place among 132 countries. We are at a good point in the World Bank Logistics Index."

Drawing attention to developments in infrastructure investments, Şimşek said that they are better than the average of developing countries in terms of artificial intelligence. Şimşek stated that the potential for artificial intelligence is good and the level of preparation is not considered bad.

Pointing out that high indebtedness is a factor that pulls economic growth downward, Şimşek said that Turkey's debt will not be a speed limit in any way. Expressing that supply from nearby geographies was a trend during the COVID-19 pandemic, Şimşek said, "But if you ask what the biggest trend is right now; it is supply from friendly and allied countries."

Emphasizing that Turkey is one of the countries that will be relatively less affected by problems in global trade, Şimşek mentioned the stability and reform program implemented to increase the predictability for investors. Şimşek continued as follows:

"This program is a program designed to increase predictability in the economy. That is the essence of it. Because it is really very difficult to work in a high inflationary environment. It is not easy. As a country, we have gone through many stress tests, so we are used to it. But still, the decline of inflation to single digits, to low single digits, will make your life much easier. That is exactly what we are doing. By ensuring budget discipline, we do not want to be a burden on either the current generation or future generations. We also want to create additional opportunities through structural transformation."

"IT WILL TAKE TIME FOR INFLATION TO FALL TO SINGLE DIGITS"

Şimşek said that it will take some time for inflation to fall to single digits. Expressing that they are on the verge of a permanent and strong disinflation, Şimşek continued his words as follows:

"Starting from next month, inflation will begin to fall very sharply. This is our path. We have entered a period of disinflation. The transition period is over. We have taken serious measures in the budget. We closed last year with a much more reasonable deficit than market forecasts. Extremely reasonable. But our agenda is busy right now. We are determined to keep the budget deficit below 3 percent next year and public debt at a low level through issues such as savings in the public sector, discipline, efficiency, and justice and effectiveness in taxation."

News Source: 12punto