07.04.2025 11:31
Treasury and Finance Minister Mehmet Şimşek stated that the chaos in the markets following Trump's decision will have a limited impact on the Turkish economy, emphasizing the composition of Turkey's growth. Minister Şimşek said, "While producing our GDP, we have relied on domestic demand rather than export-based growth. Therefore, the repercussions for Turkey will be more limited compared to countries that are more dependent on external demand."
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The Minister of Treasury and Finance, Mehmet Şimşek, spoke at the IV. Agricultural Forestry Council "Agricultural Economy Workshop" program in Ankara.
Minister Şimşek commented on Trump's decision regarding tariffs that shook global stock markets, stating, "Since a significant portion of exports is to regions outside of rule-based countries, we will be relatively less affected compared to similar countries due to protectionism in foreign trade. Turkey's dependency on exports is low compared to similar countries. While producing our GDP, we have focused on domestic demand rather than export-based growth. The impacts on us will be more limited compared to other countries because the determining factor for us is the domestic market. We have free trade agreements with a total of 54 countries outside the US and EU, and 68% of our exports go to these countries. More than 80% of our exports go to neighboring and friendly countries." he stated.
"WE HAVE CONTROLLED INFLATION"
Şimşek continued his remarks as follows:
The ratio of gross debt to national income in Turkey is at 93%, which is well below the world average.
Our program has a goal; sustainable high growth and fair distribution, to achieve this goal we aim for price stability, meaning reducing inflation to single digits and maintaining fiscal discipline.
The essence of the program is a structural transformation program that will make the gains permanent.
It is evident that we are facing a serious inflation problem, but first, we have controlled inflation. It was a control period, and from the second half of 2024, we will enter a disinflation period.
WILL THE DECREASE IN INFLATION CONTINUE?
There is success in disinflation, it is progressing closely with the program. I do not think the recent turmoil will have a lasting impact.
There is rigidity in service inflation; we have increased the upper limit of rents by 25%, and there is no intervention in education.
Inflation is clearly decreasing and will continue to decrease because this is our top priority.
We aim to reduce the budget deficit this year; there may be more slowdown than we anticipated in growth.
A depreciation of around 3-3.5% in the lira against the dollar may have a limited effect in April. However, when we look at the medium term, one year and beyond, it is disinflationary.
One of our top priorities is food supply. This is one of the most important aspects of the program. Activating the food supply chain and logistics is a very important topic.
DECLINE IN OIL PRICES
We expect the current account deficit to increase. Due to developments in the world, oil prices have collapsed; if oil prices remain at these levels, there will be no current account problem.
Turkey is among the countries most positively affected by the decline in oil and natural gas prices.
In 2024, we created nearly one million net new jobs. Unemployment rates are rapidly decreasing. The unemployment rate for men is at the lowest level in history.
Thanks to this program, we have reduced vulnerabilities and increased resilience against internal and external shocks.
RESPONSE TO RESERVE REACTIONS
They criticize why reserves are being used. Reserves are a buffer against shocks; of course, reserves are accumulated to be used.
Currency-protected deposits were an important conditional obligation for Turkey. Reducing this means reducing uncertainties regarding Turkey.
We have brought it down below 22 billion dollars; the exit from KKM is being successfully managed by the program without causing volatility and problems in the markets.
INCREASE IN TURKEY'S RISK PREMIUM
Some link this last increase to 1-2 weeks of volatility. No, look at the last 3-4 days; with the protectionist measures announced by the US, the CDS of many countries has increased more than ours. We have performed very well compared to similar countries.
Our dependence on foreign energy will significantly decrease in the coming years.
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