Speaking in the US, Mehmet Şimşek gives a date for single-digit inflation

Treasury and Finance Minister Mehmet Şimşek made assessments regarding the Turkish economy at the Global Outlook Forum organized by the Institute of International Finance (IIF).

Explaining Turkey's policy priorities, Şimşek stated that the Medium-Term Program (OVP) has a "strong and credible" framework.

Şimşek said, "The program aims to restore price stability and fiscal discipline, while also addressing other macroeconomic challenges such as reducing the current account deficit. The ultimate goal is to ensure sustainable high growth rates and prosperity for all."

MESSAGE ON INFLATION

Stating that the most important short-term challenge is high inflation, Şimşek said, "We will continue to support the central bank's efforts to combat inflation with fiscal policy."

Şimşek explained that the main objectives of the program are to ensure price stability, increase competitiveness and productivity, and implement structural reforms.

Stating that the earthquakes that occurred in Turkey last year caused a large deficit in the budget, Şimşek noted that they have taken significant measures to reduce this deficit.

Stating that the improvement in the growth expectations of Turkey's main trading partners will support external demand, Şimşek said, "The current account deficit is narrowing beyond our program targets."

"WE WANT TO SEE IT FALL TO SINGLE DIGITS BY 2026"

Şimşek noted that monthly inflation is slowing and annual inflation will begin to fall from the second half of this year. Minister Şimşek said, "Reducing inflation is our primary goal. We are already seeing signs of this month by month, but we will see the annual trend in the second half of the year. We want to see inflation fall to single digits by 2026, and by then, we will have implemented quite comprehensive structural reforms."

Stating that they have held numerous meetings with investors, Şimşek said, "Investors' perspective on Turkey has changed compared to last year. Last year, investors had doubts about the possibility of stepping back from orthodox policies and the program not being implemented. This year, there were almost no questions about this. In other words, there are no questions about the continuity of the program; now the questions are more about the details of the program."

Emphasizing that they are determined to support the Central Bank in the field of public finance, Şimşek said, "We will strengthen the program and accelerate structural reforms moving forward."

Şimşek said, "There is very strong interest in Turkish assets. We need to convince the public that inflation will fall." Minister Şimşek stated that the market's inflation expectations for the next 12 months are around 36 percent.

"THERE IS A STABLE PERIOD"

Pointing out that there are no elections in Turkey until June 2028, Şimşek said that this will provide plenty of time in terms of political stability to achieve the results of the program.

Stating that the Turkish economy is resilient, Şimşek emphasized that the country has a vibrant private sector and a strong culture of entrepreneurship.

Pointing out that Turkey has long-term advantages compared to peer countries, Şimşek noted that global indebtedness is a factor slowing down growth and that Turkey's debt-to-GDP ratio is low compared to the average of developing countries.

Touching on fragmentation in trade, Şimşek explained that geostrategic competition and geopolitical tensions are causing fragmentation.

Emphasizing that Turkey is one of the best candidates to benefit from this, Şimşek mentioned close relations with Europe, the Middle East, North Africa, and Central Asia.

"WE ARE DETERMINED TO DECARBONIZE THE TURKISH ECONOMY"

Pointing out that the green transition is one of Turkey's biggest priorities, Şimşek noted that as of last year, 55 percent of the installed power capacity was based on wind, solar, and hydroelectric energy, and that the nuclear power plant under construction will also come online.

Pointing out that dependence on fossil fuels is gradually decreasing, Şimşek said, "We are determined to decarbonize the Turkish economy through investments that will help increase competitiveness and productivity with the green transition."

News Source: AA