Inflation will continue to decline, says Şimşek

ANKARA

Inflation is high but is moving in line with the economic program, Treasury and Finance Minister Mehmet Şimşek has said, adding that under the current expectations, the decline in inflation will continue.

“The monthly inflation has started to decline, while the decline in annual inflation will accelerate in the second half of the year,” Şimşek said at an event organized by the Independent Industrialists and Businessmen’s Association (MÜSİAD).

The monthly increases in the headline and core inflation are in line with the targets set out in the medium-term program, the minister added.

Unemployment is declining, the economic growth, which was strong in 2023, will slow in 2024, Şimşek said.

In the medium-term program, the government forecast the GDP growths for 2023 and 2024 at 4.4 percent and 4 percent, respectively.

“We will move from a tighter monetary policy to a looser monetary policy in 2024,” Şimşek said.

The main targets are to achieve price stability and fiscal discipline and lower the current account deficit to a manageable, sustainable level, the minister added.

The annual consumer price inflation accelerated from 61.98 percent in November to 64.77 percent in December. The month-on-month increase in consumer prices, however, slowed from 3.3 percent to 2.93 percent.

Building up of reserves will reduce volatility in foreign exchange rates, boost resilience to financial shocks and lead to a decline in risk premium, he said, noting that the Central Bank’s reserves have increased by $47 billion since May 2023.

The fiscal policy is also largely supporting disinflation, Şimşek said.

“Monetary policy alone is not enough. We need to support both competitiveness and disinflation by increasing productivity and reducing unit costs through structural reforms,” he added.