Excessive demand will vanish later this year: Şimşek

ISTANBUL

Excessive domestic demand that has caused higher inflation will disappear around the second and third quarter of this year, Finance Minister Mehmet Şimşek has said.

The Central Bank is taking additional tightening measures, the minister said in an interview with private broadcaster CNN Türk. “We are fully supporting this.”

Earlier this week the Central Bank announced several steps to curb lending.

The annual inflation will decline by 20 to 25 points this summer, Şimşek said, noting that the Central Bank expects inflation to peak in May and to drop sharply thereafter.

The inflation rate accelerated from 64.86 percent in January to 67.07 percent in February. But the monthly inflation rate slowed from 6.7 percent to 4.53 percent.

There are signs the that economic program is working, Şimşek added. “We expect the current account deficit, which stood at around $60 billion last year, to decline to some $30 billion to $35 billion. This is one of the best indicators that the program is working.”

“We will not do anything, which is not foreseen in the economic program, after the [March 31 local] elections,” the minister also said.

The budget deficit will probably remain high this year, but the government aims to bring the budget deficit, including the earthquake-related expenditure, below 3 percent of GDP by 2025 and to keep it under 3 percent permanently, Şimşek stressed.

Türkiye does not have problems accessing foreign funds, the minister also said, noting that last year some $8.8 billion was raised from international institutions and this figure is expected to climb to around $12 billion to $13 billion in 2024.