08.06.2026 22:20
Treasury and Finance Minister Mehmet Şimşek stated that they are accelerating housing supply to curb the rise in rental inflation, and said that with a 750,000 housing project to be implemented within two years, rental inflation, which has fallen below 50% nationwide, will drop to 30-35% by the end of the year.
Minister of Treasury and Finance Mehmet Şimşek made striking assessments regarding the economic agenda during a live broadcast program he attended.
Şimşek evaluated many critical topics, from the downward trend in inflation to housing supply, from rental prices to historic support for exporters, emphasizing that they have increased the resilience of the Turkish economy against global shocks and continue on their path with determined steps.
"THE IMPORTANT THING IS FOR INFLATION TO CONTINUE ITS DOWNWARD TREND"
The highlights from Minister Şimşek's statements are as follows: "As for 2024; when these shocks emerged, we responded correctly. We tightened financial conditions, raised interest rates, and took necessary measures. Last year, we experienced very large shocks. Let me give an example regarding citizens' orientation toward foreign currency. In March 2024, towards the elections, citizens' demand for foreign currency was around 9 billion dollars.
During the trade wars and domestic developments last year, this figure was around 5 billion dollars. Now, a much larger war has occurred. The current account deficit is expected to increase. Despite this, from the beginning of the war until now, our citizens have been net sellers of foreign currency. They have sold approximately 1.7 billion dollars in foreign currency. Non-residents, i.e., funds and foreign investors, naturally behave differently. But we see a similar picture among them as well. Although the magnitude of the shock has grown, the reaction has been more limited and milder.
Why? Because if you respond correctly, act based on rules, and ensure predictability, you build credibility. Credibility, in turn, comes from the alignment of words and actions. Therefore, one of the most important factors here is building buffers, i.e., investing in the economy's resilience. Another crucial element is long-term, correct policy responses and credibility building.
As a minister, I do not have personal expectations. I also do not have predictions. That would not be appropriate. We believe in institutional capacity and reference the figures produced by responsible institutions. The Central Bank sees inflation at 26 percent at the end of the year. The market sees it a bit higher. What matters here is the direction. At the end of 2022, inflation was around 64 percent. In 2023, it was roughly the same. In 2024, disinflation began. Last year, it fell to around 31 percent. Despite a huge oil shock and the war, inflation was 32.6 percent. The important thing for us is for inflation to continue its downward trend. We are taking supply-side measures. The key is for inflation to maintain its downward movement. This war will end. As soon as this war ends, we will see its effect.
"THERE IS NO REASON TO BE PESSIMISTIC"
If there is oil supply, oil prices will not be like they are today. Over the last 23 years, we have paid $1.1 trillion for oil and natural gas imports. We are talking about a trillion dollars. That is, we are talking about an amount roughly twice Turkey's total private sector and public external debt.
Look, we have spent these resources to import oil, natural gas, and their derivatives from our neighbors and the world. Therefore, Turkey is one of the countries that will be most positively affected when oil prices fall. This will improve expectations. Expectations regarding the current account deficit will improve, and expectations regarding the exchange rate will improve. This will quickly be reflected in inflation expectations. Hence, there is no reason to be pessimistic. Of course, it is easy to pump pessimism in this environment. Look, I say it again; the conjuncture we are going through is a difficult one. The impact of the war is of a magnitude that cannot be ignored. However, this is not an unmanageable situation. We will manage it, and we have managed it. So far, we have managed it and we see it as manageable. Were we prepared? We prepared Turkey not for war, but against shocks. I cannot foresee war. Inflation will continue its downward trend. Therefore, there is no reason to be pessimistic. Yes, inflation is falling. However, when compared to the world, we are still at high levels. Our fight against the high cost of living is not yet over. Fighting the high cost of living requires determination and continuity.
"BY THE END OF THE YEAR, RENT INFLATION WILL FALL TO THE 30-35 PERCENT RANGE"
If you look at 2025, three items account for 67 percent of the average in Turkey. Rent-housing, food, and transportation. In fact, for people in the lowest income bracket, it corresponds to 77 percent. We are increasing housing supply. In the earthquake zone, rent inflation once rose to 118 percent. At the end of 2023, rent inflation across Turkey was 109 percent. It was higher in the earthquake zone. 500 thousand houses have been delivered. 120 thousand houses will be delivered this year as well. In the earthquake zone, new rents, rent inflation has dropped to 20 percent. Because there is supply. Nationwide, rent inflation is just below 50 percent. When 750 thousand houses are brought into use over the next 2 years, rent inflation will be largely resolved. By the end of this year, rent inflation will fall to the 30-35 percent range.
Today, apart from China, how many countries can you name that will produce 650 thousand houses in two years? We are doing this with state resources and offering it to our nation. We will solve these problems. We are on the right path. Inflation is in a downward trend. We have prioritized disinflation. We prioritized disinflation over the budget. That is why we implemented the sliding scale system. We made sacrifices from the budget. Inflation creates income inequality. In the last 2 years, income distribution has been equalizing. You cannot give up this fight. We are determined on this matter. The political will is very strong. The support of our President is very important. That is why we are achieving results.
"THERE IS A SERIOUS EFFORT TO INCREASE FOOD SUPPLY"
Let's come to the food issue. Food has a seasonal dimension. Turkey is conservative regarding food imports. Many countries do this. There is a serious effort to increase food supply. We have launched the structure we call organized agricultural zones in 45 provinces. There is an effort to significantly increase greenhouse production. This is not something that can be solved in 2 days. We will get results from organized agricultural areas in the next 2-3 years. The delivery of production from the field to the final consumer is a chain. There is a waste problem in our country. In some areas of inflation, monetary policy is important. But food is related to the supply and supply chain. Inflation will continue to fall, but some dimensions require structural transformation. That requires time.
Let's come to the food issue. Food has a seasonal dimension. Turkey is conservative regarding food imports. Many countries do this. There is a serious effort to increase food supply. We have launched the structure we call organized agricultural zones in 45 provinces. There is an effort to significantly increase greenhouse production. This is not something that can be solved in 2 days. We will get results from organized agricultural areas in the next 2-3 years. The delivery of production from the field to the final consumer is a chain. There is a waste problem in our country. In some areas of inflation, monetary policy is important. But food is related to the supply and supply chain. Inflation will continue to fall, but some dimensions require structural transformation. That requires time.
\"WE WILL CONTINUE OUR SUPPORT, EVEN INCREASE IT\"
It is true that our real sector faces difficulties in accessing financing. We are making intense efforts to alleviate these challenges. The fundamental approach set forth by our President is investment, employment, production, and exports. Now, let us look at our exporters. In 2023, the daily volume of what we call rediscount loans—affordable credit—was 300 million liras. We have increased this to 4.5 billion liras. Mark you, we are talking about a 15-fold increase. The capital of Turk Eximbank was 13.8 billion liras. We have raised it to 100 billion liras. Today, we provide support stronger than ever before. Suppose commercial loan interest rates in the market are, for example, at 50 percent. We provide financing to our exporters at much more favorable terms. Under rediscount loans, we offer our exporters credit at around 23.9 percent. Note that inflation is at 32.6 percent. That is, we lend to our exporters at a cost below inflation. Why? Because exports are very valuable and important to us. We will continue these supports, and even increase them. We will not stop here. When conditions permit, we will further reduce financing costs. I emphasize this in particular. Therefore, our exporters need not worry."