Minister Şimşek points to post-election period for decline in inflation: 'The fight is a process'

Minister of Treasury and Finance Mehmet Şimşek spoke at the opening of the session titled "Reshaping the Global Economy," held as part of the TRT World Forum 2023 in Istanbul, which was organized under the theme "Thriving Together: Responsibilities, Actions and Solutions."

"FOR GLOBAL GROWTH..."

Minister Şimşek discussed the negative impact of global climate change on international trade and international investments, stating that they would take the necessary steps in the fight against climate change, which is one of the most important issues of the coming period.

Pointing to the conflicts occurring in different parts of the world in addition to climate change, Şimşek commented, "Even the most basic rules are no longer respected. Look at what is happening in Gaza. Some countries cannot even call for a ceasefire. They do not even have the courage for that. This is the kind of world we are currently living in. A hegemon power and many other players are still discussing how the new system will be shaped, and this brings a lot of uncertainty for global growth."

"TURKEY STILL OFFERS SIGNIFICANT GROWTH POTENTIAL"

Minister of Treasury and Finance Şimşek mentioned the advantages offered by Turkey's geographical location, stating that Turkey, as a major producer, could develop this feature with neighboring countries.

Pointing to Turkey's growth performance over the last 10 years, Şimşek emphasized that they have done many things better than developing countries other than India and China.

Noting that Turkey's population, as an accessible market, is larger than the total of 18 EU countries, Şimşek said, "If we put our own house in order here, no country can ignore Turkey when it is such an important power. Turkey still offers significant growth potential. We have opportunities, but we need to do more to gain an advantage."

POINTS TO POST-ELECTION PERIOD FOR DECLINE IN INFLATION

Emphasizing that they have started to implement an inclusive program to make the best use of the opportunities they have, Şimşek stated the following:

"Sustainable high growth and permanent prosperity increase are only possible with price stability. For this reason, our primary priority is the fight against inflation. Our program is working successfully. The positive reflections of the program have started to be seen in macro indicators following financial indicators. While we are moving towards rebalancing in growth, the current account deficit is falling, there is a loss of momentum in inflation, and our reserves are increasing. Annualized core indicators, which provide accurate information about the trend in inflation, are in line with our targets. The fight against inflation is a process; the decline in annual inflation will begin from the middle of 2024."

FOREIGN INVESTOR INTEREST

Minister Şimşek stated that earthquake-related expenditures caused a temporary deterioration in the budget balance, and that they have implemented revenue and expenditure policies to restore fiscal discipline.

Expressing that the practices in monetary and fiscal policy will be supported by comprehensive structural reforms in the coming period, Şimşek made the following statements:

"Recently, foreign investor interest in our country has increased. There was an inflow of 4.9 billion dollars in the June-September period into portfolio investments, which saw an outflow of 2.9 billion dollars in the January-May period. Current data shows that the inflow continues. The external debt rollover ratios of the banking sector and the non-banking sector are rising. With the falling current account deficit and increasing capital inflows, our reserves continue to increase. Gross reserves have risen by 42 billion dollars compared to May."

Şimşek noted that the current account deficit continues to narrow and that this narrowing will continue, explaining that monetary policy has become more functional, the 5-year credit risk premium (CDS) continues its downward trend, the increase in ratings will continue, and these developments show that they are on the right track.