Simsek says market shows confidence in Türkiye at 2024 Global Outlook Forum in Washington

Minister of Treasury and Finance Mehmet Simsek expressed that markets and investors have begun to believe that inflation will decrease and the Medium-Term Program (MTP) will yield results.

Speaking at the Global Outlook Forum organized by the Institute of International Finance (IIF), Simsek evaluated the Turkish economy.

Simsek described Türkiye's policy priorities and stated that the MTP has a "strong and reliable" framework.

'We will continue to support CTB's policies'

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

Simsek highlighted high inflation as the most significant short-term challenge: "We will continue to support the central bank's efforts to combat inflation through fiscal policy."

Simsek explained that the program's main objectives are ensuring price stability, increasing competitiveness and efficiency and implementing structural reforms.

Recalling that last year's earthquakes in Türkiye caused a significant deficit in the budget, Simsek noted that they have taken significant measures to reduce the deficit.

'Reducing inflation is our priority'

Simsek stated that the improvement in growth expectations of Türkiye's main trading partners will support external demand.

"The current account deficit is contracting beyond our program targets," Simsek said.

He noted that monthly inflation has slowed and annual inflation is expected to decrease from the second half of this year.

"Reducing inflation is our priority. We are already seeing signs of this month by month, but we will see the trend annually in the year's second half. We want to see single-digit inflation by 2026, and until then, we will implement comprehensive structural reforms," Minister Simsek said.

'Strong interest in Turkish assets'

"Investors' perspective on Türkiye has changed compared to last year. Last year, investors had doubts about deviating from orthodox policies and possibly not implementing the program. This year, there have been almost no questions on the continuity of the program; now, the questions focus more on the details of the program," Simsek maintained.

Simsek said they have held numerous meetings with investors.

Emphasizing their determination to support the Central Bank in fiscal matters, Simsek said: "We will strengthen the program and accelerate future structural reforms."

"There is very strong interest in Turkish assets. We need to convince people that inflation will decrease," the Finance minister stated that the market's inflation expectations for the next 12 months are around 36%.

'There is a stable period to achieve program results'

Pointing out that there are no elections in Türkiye until June 2028, Simsek said this will provide ample time for political stability to achieve program results.

Simsek emphasized the resilience of the Turkish economy, highlighting a vibrant private sector and a robust entrepreneurial culture in the country.

Türkiye's debt-to-GDP ratio is lower than the average of developing countries

Simsek pointed out Türkiye's long-term advantages compared to benchmark countries, mentioning that global indebtedness is a slowing factor for growth and that Türkiye's debt-to-GDP ratio is lower than the average of developing countries.

Discussing trade fragmentation, Simsek explained that geopolitical competition and tensions cause fragmentation.

Simsek stressed that Türkiye is one of the best candidates to benefit from this, mentioning close relations with Europe, the Middle East, North Africa, and Central Asia.

⁠'We are determined to decarbonize the Turkish economy'

Simsek emphasized that green transformation is one of Türkiye's top priorities.

As of last year, 55% of installed power capacity relies on wind, solar and hydroelectric energy, with the ongoing construction of a nuclear power plant.

Thus, indicating a decreasing dependency on fossil fuels, Simsek said: "We are determined to decarbonize the Turkish economy through investments that will increase competitiveness and productivity, thanks to the green transformation."

Source: Newsroom