Türkiye poised to outperform emerging markets amid Trump tariffs finance ministers tells FT

Türkiye has a chance to outperform other emerging markets hit by Donald Trump’s tariffs “once the dust settles” thanks to manageable US trade exposure and lower oil prices, the country’s Finance Minister Mehmet Şimşek said.

Speaking to the Financial Times, Şimşek said he collapse in oil prices would narrow the current account deficit of energy-importing Türkiye and thus help rebuild international reserves, a closely watched metric of the macroeconomic reforms he launched around 18 months ago, Caliber.Az reports.

Slowing global growth and tight domestic money policies were also “disinflationary”, which would help get Turkish inflation down — a central aim of Şimşek’s stabilisation programme.

On US tariffs, Şimşek argued Türkiye’s $1.3 trillion economy was relatively insulated as 80 per cent of its trade is with countries with which it has a free trade agreement, such as its customs union with the EU, or with “friendly neighbours” in the Middle East, central Asia and north Africa.

Trump, who has good relations with Türkiye’s President Recep Tayyip Erdoğan, placed the baseline 10 per cent tariff on Turkish exports to the US.

“All of this is relatively constructive,” Şimşek said. “When the dust settles, we hope and believe Türkiye could positively decouple” in investors’ eyes from more troubled emerging economies in Asia and elsewhere.

Last year, bilateral trade with the US totalled $32 billion, about 5 per cent of Türkiye’s overall trade in goods, with a $1.5 billion surplus in Türkiye’s favour, according to US data.

But, Şimşek stressed, the main point of a small fiscal deficit was to help the central bank get inflation down and not to stop Turkish debt rising, which is only around 25 per cent of GDP. The budget deficit had been forecast to fall to 3.1 per cent of GDP this year, from 4.9 per cent in 2024.

“We will maintain spending discipline regardless,” he said. “Big picture, we can live with this.”

Şimşek added that he was “all in favour of the rule of law, achieving price stability, enhancing predictability [and] improving the investment climate. Those are music to my ears.”

By Khagan Isayev