Finance Minister Şimşek confident inflation will continue to decline

ANKARA

Finance Minister Mehmet Şimşek has voiced confidence that inflation will continue to decline and that targets will be met.

In an interview with private broadcaster NTV on Oct. 15, Şimşek noted that inflation peaked in May but declined by 26 points since then.

“We will increase our credibility by converging to our targets. We will eventually meet our inflation targets, and we will continue to do whatever it takes to do so,” he said.

The minister noted that services inflation is running high.

“If services inflation had not been sticky, we would perhaps be much closer to our inflation target today,” Şimşek said, adding that the economic program is yielding results.

The annual inflation rate slowed from 51.97 percent in August to 49.38 percent in September, according to the latest official data.

In the medium-term program, the government’s inflation targets for 2024 and 2025 are 41.5 percent and 17.5 percent, respectively. The government expects the annual inflation rate to decline to 9.7 percent in 2026 and further down to 7 percent in the following year.

The current account deficit is the Turkish economy’s “soft underbelly,” said Şimşek, adding that last year, before the program [was started to be implemented], the current account deficit was very high.

“In the first year, we set an ambitious target of lowering the deficit to 6 percent of national income. Today, the current account deficit has fallen below 1 percent,” the minister added.

“We aim to bring the current account deficit permanently below 2.5 or 2 percent… We want to solve Türkiye's external fragility permanently,” he said.

Türkiye’s current account surplus widened from $778 million in July to $4.3 billion in August.

The current account deficit fell from $38.9 billion in January-August last year to $9.7 billion in the first 8 months of 2024.

The annualized deficit declined from $51.8 billion in August 2023 and $15.1 billion in July to $11.25 billion in August this year, according to the latest data from the Turkish Central Bank.

Şimşek also said he would travel to the U.S. next week to attend the IMF-World Bank annual meetings.

The minister said he will hold talks with representatives of investment banks at the margin of the IMF-World Bank event and that he would meet with the U.S. Fed Chair Jerome Powell and ministers from different countries.

"We will attend the events of all the world's leading investment banks. We will have sometimes up to 15 meetings a day, and we will spend five-six very busy days in the U.S.,” Şimşek said.

In his visit to Qatar last week, he met with 250 executives of leading companies, he added.

He made a very comprehensive presentation and explained the transformation in energy and digital transformation, the minister noted.

“The question mark in their minds is that the [Turkish] lira has been volatile in the past. As we reinforce macrofinancial stability, I believe there will be a tremendous interest from there,” Şimşek said.