Turkey’s economy ministers at odds over reform agenda, economic outlook

ANKARA/MILAN

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Finance Minister Mehmet Şimşek and Economy Minister Nihat Zeybekci have differed on Turkey’s reform agenda and economic outlook, amid a slowdown in domestic growth and turbulent international headwinds.

Şimşek recently warned of potential economic losses unless political stability is maintained and Turkey returns to a reform agenda, but Zeybekci on Sept. 15 in Milan said he disagreed and Turkey’s economy was already in solid shape. 

“Our budget figures are one of the world’s best. There has been around 40 percent of improvement in Turkey’s current account deficit. Yes, our exports have been declining, but our imports are dropping in a faster pace … By the end of this year, the coverage ratio of exports to imports will have increased to 80 percent,” he said, adding that there has also been an increase in foreign capital inflow to Turkey. 

Zeybekci said the loss of the Turkish Lira’s value against the U.S. dollar is not an economic indicator but rather a “financial result” and “mainly speculative.” 

“Yes, Turkey’s currency has lost around 29 percent in value over this year. But we have seen an average 21.5 percent decrease in six currencies, and our currency was in a better position than the remaining five until June. Despite escalating terror attacks, our currency is now been rebounding,” he said, adding that Turkey’s total debt is below $400 billion. 

“I think the Fed will not raise interest rates this week, or in this period. Even if it raises [them], it will be a very minimum level. The markets have already priced in a rate hike,” the economy minister added. 

The Fed is expected to announce its long-waited rate decision on Sept. 17 after a two-day meeting. 

Speaking in an interview on Kanal 7 on Sept. 13, Şimşek said that “unless we maintain political stability and return to a reform agenda again, we cannot preserve existing economic gains let alone achieve our 2023 economic targets.”