Türkiye’s economic program shows resilience as inflation declines, says finance minister

Türkiye’s economic reform agenda is delivering tangible results, said Minister of Treasury and Finance, Mehmet Şimşek, who highlighted a continued decline in inflation and improved fiscal indicators, despite recent market turbulence.

Şimşek reaffirmed Ankara’s commitment to its long-term economic strategy, stating that the program has “overcome two major shocks” and is strengthening the nation’s economic fundamentals, Caliber.Az reports per Turkish media.

“There has been significant progress: inflation is decreasing and will continue to decline,” Şimşek asserted, reflecting on the outcomes of a nearly two-year-long economic stabilization program.

Official figures reveal that annual inflation in Türkiye fell to 35.4 per cent in May, the lowest level since late 2021. The current rate is less than half of what it was a year ago, signaling growing momentum behind Ankara’s monetary tightening and fiscal discipline efforts.

Şimşek also pointed to an improvement in foreign exchange reserves. The Central Bank of Türkiye (CBRT) has recently stepped up its purchase of foreign currencies, following a temporary dip in March and April. According to Şimşek, net reserves have surged by over $90 billion since the end of May 2023, with gross reserves climbing by $55–60 billion during the same period.

The minister attributed the program’s success in part to the Central Bank’s assertive policy response. In April, the bank raised interest rates following a bout of market instability in March—instigated in part by the high-profile arrest of Istanbul Mayor Ekrem İmamoğlu amid a corruption investigation and the imposition of additional protectionist measures.

Şimşek emphasized that the program has delivered across several macroeconomic indicators. “Inflation is falling, the budget deficit is shrinking. The current account deficit has narrowed and is now at a sustainable level. We have mitigated several risks and enhanced the economy’s resilience to both external and internal shocks,” he noted.

He further underscored the credibility of Türkiye’s fiscal and monetary roadmap. “This program has successfully weathered two very serious shocks—first domestic, then external—occurring in March and April, and it has proven its reliability. A program that can withstand two major shocks consecutively has strengthened Türkiye’s economic structure and enhanced its resilience,” he added.

By Vafa Guliyeva