Minister Şimşek made evaluations regarding the Turkish economy in the USA.

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The Minister of Treasury and Finance, Mehmet Şimşek, stated that they expect inflation to fall to single digits by the end of 2026 and expressed that inflation is responding to the implemented program. Şimşek made a detailed presentation regarding Turkey's economic outlook at an event organized by the Brookings Institution. Describing the progress recorded in the Turkish economy, Şimşek said, "We expect inflation to drop to single digits by the end of 2026. Inflation is responding to the program we have implemented. We are considering lifting the short-selling ban on the BIST 50."

"THE DISINFLATION PROCESS WILL ACCELERATE"

Emphasizing that inflation will record a decline beyond the base effect, Şimşek stated, "The delayed effects of monetary policy have started to come into play. Negative fiscal impulse and a more supportive income policy will accelerate the disinflation process. Firms' pricing behavior has started to improve." Minister Şimşek noted, "Turkey needs price stability to sustain strong growth; there is no contradiction between growth and inflation." Indicating the contraction in the current account deficit, Şimşek said, "The increase in oil and natural gas production, energy transformation, and active industrial policies are making the improvement in the current balance permanent. This will contribute to reserve accumulation and reduce the ratio of external debt to national income."

FOREIGN CURRENCY PROTECTED DEPOSITS HAVE DECREASED BY MORE THAN 100 BILLION DOLLARS

Highlighting that the main driver of the increase in reserves is the decrease in dollarization, Şimşek pointed out that the increasing external debt rollover rates of the banking sector and the real sector, as well as portfolio inflows, have also contributed to reserve accumulation, emphasizing that there has been a decrease of over 100 billion dollars in foreign currency protected deposit accounts since August 2023. Şimşek stated, "We have a program that anticipates an increase in productivity. Turkey demonstrates a resilient structure against fragmentation in trade. In addition to the Customs Union, we have free trade agreements with 27 countries. Countries with which we have free trade agreements account for 60% of our total exports."

"WE ARE GROWING FAST"

Referring to Turkey's advantages in investment, Şimşek pointed out that the country is a large economy with a population approaching 90 million and a per capita income of 15 thousand dollars. Şimşek noted that the country's growth performance is significantly above its peers among emerging economies, stating, "We are not only a large economy, but we are also growing rapidly." Emphasizing that the country has a strong and qualified labor market, Şimşek highlighted that more than 1 million qualified workforce graduates from universities and vocational schools each year.

Şimşek also drew attention to the strong production culture in the country, saying, "So, why are we not as wealthy as some developed economies? Because we have not yet moved up the value chain. This is an issue we need to work on. We will accelerate structural reforms to produce medium-high and high value-added products."

HE POINTED OUT THE TIMING OF THE TUSAŞ ATTACK

After his presentation, responding to questions, Şimşek, regarding the terrorist attack on the Turkish Aerospace Industries (TUSAŞ) campus in Kahramankazan, stated that the Ankara attack coming immediately after Devlet Bahçeli's statements was not a "coincidence," adding, "This shows that the PKK is a terrorist organization and that some circles do not want unity and peace."

"TURKEY'S CLOSENESS TO THE EU IS BENEFICIAL FOR BOTH SIDES"

In response to a question about Turkey's desire to join BRICS, Şimşek stated that BRICS is a dialogue platform in its current format and is not equivalent to a more structural platform like the European Union (EU). Şimşek emphasized that Turkey has proven to be an asset rather than a burden for the EU, stating, "If they really want deeper integration, they need Turkey, but their own politics are preventing that." Şimşek pointed out that Turkey's closeness to the EU would be beneficial for both sides, but noted that this strategic depth and perspective is not seen in European political circles.

EMPHASIS ON UPDATING THE CUSTOMS UNION

In response to a question about how the tariffs that Republican presidential candidate Donald Trump is considering would affect Turkey, Minister Şimşek stated that it would not be appropriate to comment on candidates.

Indicating that it is anticipated that the U.S. will have a larger budget deficit due to tax cuts, Şimşek noted that a larger deficit would mean increased debt. He stated that this would lead to higher long-term interest rates and a strong dollar, adding that this situation would not serve emerging markets and thus Turkey. Şimşek mentioned that Turkey could also be affected by potential trade separations, stating that it is difficult to say whether this would bring Turkey and the EU closer or lead to an update of the Customs Union agreement due to the European political environment.

Şimşek emphasized that updating the Customs Union to include services, public procurement, and agriculture could double trade volume in the long term, stating, "Everyone can benefit from this, but politics is preventing it."