Vice President Yılmaz's inflation forecast: 'We do not expect a significant decline'

Vice President Cevdet Yılmaz, the Ankara Chamber of Industry (ASO) attended the 'ASO 60th Anniversary Awards' ceremony held at a hotel in Ankara to mark its 60th anniversary. 

EVALUATED THE ECONOMY

Speaking at the program, Yılmaz stated that the recovery in the global economy continues, albeit slowly and unevenly, following the COVID-19 pandemic and the Russia-Ukraine war, "While the weak trend in global growth continues, geopolitical risks are increasing price volatility and risks. However, we see that headline inflation is starting to fall globally, while core inflation remains relatively high. Leading central banks continue to implement tight monetary policies to lower inflation. While the manufacturing industry is relatively weak, especially in developed countries, we see that the services sector has been in a slight recovery recently. In such a global climate, we have been implementing policies since last year that reduce uncertainty in our economy and allow all sectors to see their path more clearly. Uncertainty is the enemy of the economy. The more you reduce uncertainty and increase predictability, the more you strengthen the economy." he said.
Emphasizing that policy uncertainties have been eliminated with the Medium-Term Program and Development Plan, which were prepared in consultation with business people and all relevant segments, including workers and employers, following the presidential election, Yılmaz said, "We have shared a very detailed roadmap with our society regarding monetary policy, fiscal policy, and structural reforms. Our President himself shared the Medium-Term Program. Therefore, we are implementing our policies in an environment where political and policy uncertainties have been minimized and predictability has been ensured. As you know, this has three pillars: monetary policy, fiscal policy, and structural reforms. We are implementing all three pillars in coordination with a strong team, linking them to one another." he stated.

LOCAL ELECTIONS 

Stating that they have observed some debates taking place on the occasion of the local elections, Yılmaz said, "I would like to state once again here that these have no basis. Local elections are not elections where macro policies are likely to change. Local elections are local elections. With general elections, the Parliament is determined, the government is determined, and policies at the national level are set. Local elections, on the other hand, are about the administration of our provinces and cities and local services. Therefore, I would like to express that the discussions held regarding our macro policies on the occasion of these local elections have no basis and consist of speculative rhetoric." he said.

Stating that they are working to ensure fiscal discipline, balance growth, reduce the current account deficit, and strengthen reserves in the fight against inflation, Yılmaz said, "We are making efforts in all these areas simultaneously. While the global economy grew by around 3 percent in 2023, the Turkish economy achieved a growth rate of 4.5 percent. As you know, the global economy has averaged around 3.6 percent over the last 20 years, which is below its historical averages, and global growth occurred at around 3 percent last year. Therefore, global trade and the economy are below their historical averages. Our average annual growth rate over the last 20 years is 5.4 percent. Our growth came in at 4.5 percent, which is slightly below our historical average. However, when compared to the world, we still managed to achieve a growth rate 1.5 percentage points higher than the global average. We closed 2023 with a growth rate slightly above what we had projected in the Medium-Term Program," he said.

Yılmaz noted that industrial investments are continuing strongly and that the composition of growth shows that investments are moving toward a significant point.

"Inflation is our primary issue. We need to continue the fight here with determination and a medium-to-long-term perspective," Yılmaz said, "It is the same globally and the same for us. It is not something unique to us. Fighting inflation takes time all over the world. It is important that we show determination here, and that we follow the right policy with patience and persistence. It is important that we see the direction. There may be daily fluctuations. There may be news in the world, an event may occur, or there may be cyclical, daily, or weekly developments in Turkey. I am setting those aside. The main issue is our policy framework and our direction. Where this takes you is what matters; if you have entered the right path, you will reach your goal sooner or later. It might be a week early or three days late, but you will reach your goal. Therefore, I want to express that our policy framework and the path we are on are important," he stated.

WE DO NOT EXPECT A SIGNIFICANT DECLINE

Stating that they have begun to see monthly results in the fight against inflation, Yılmaz said, "January and February came in slightly above expectations. I do not want to go into the details here for various reasons regarding timing. But it is gradually losing momentum, and it will continue to do so. We will see this even more clearly starting in March, hopefully. We do not expect a significant decline in annual inflation until May. After May, in the summer months, when we receive the June inflation figures—as you know, the June figure is released—but starting from June, we will actually see significant drops in inflation on an annual basis. We will see these declines in the second half of the year. For 2025, we foresee inflation around 15 percent in our Medium-Term Program. For 2026, we anticipate a return to single-digit inflation. We have made all our plans and programs accordingly." he said.
Yılmaz stated that there is a decline in the current account deficit, noting that it had risen to as high as 60 billion dollars in mid-2023.

Stating that the current account deficit fell to 45 billion by the end of the year, Yılmaz said, "We see that the current account deficit fell to 37.5 billion dollars in January. I am referring to the annualized, trailing 12-month current account deficit. The February data has arrived, but the current account deficit calculation has not yet been released. If we were to make a preliminary assessment based on the February data, we can easily say that it will fall even further. Our current account deficit will likely drop to around 32 or 33 billion dollars. This is also very encouraging. One of the biggest obstacles to sustainable development in Turkey is the current account deficit. In terms of sustainable development, we must bring the current account deficit down to a certain level. I can say that we are in a very positive development trend. When we look at it, there is a 22.6 billion dollar drop in the current account deficit from May to January. We can say that our policies, which support our exporters and reduce imports, as well as our policies aimed at balancing foreign trade, have been effective in this improvement, especially in the recent period." he added.

WOMEN'S EMPLOYMENT

Stating that he meets with the business world wherever he goes and is aware of the problems, Yılmaz said, "One of the most prominent issues our industrialists voice is the difficulty in finding skilled, and in many of our regions, unskilled labor. We really need to put our heads together and work on this. We are also discussing these issues at the Economic Coordination Council. We have also formed a special working group. We are carrying out serious work on vocational training. I know that you are also doing important work in this regard. We need to increase the alignment between our labor market and our education system. As women's education increases, their vocational training has also increased. We will see more female employment. I believe this will make a significant contribution to closing this labor gap and increasing entrepreneurship." he said.

News Source: İHA