Türkiye ‘open for business and dialogue,’ says Finance Minister Şimşek

ANKARA

Türkiye is "open for business and dialogue," Turkish Treasury and Finance Minister Mehmet Şimşek announced on Wednesday, emphasizing the nation's benefits from post-pandemic supply chain diversification and its comprehensive reform program to boost competitiveness, productivity, and potential growth.

Speaking at the Berlin Global Dialogue (BGD) 2024, where the theme was “building common ground,” Şimşek stated, “We are open for business, and we are open to dialogue.”

Şimşek highlighted Türkiye's geographical challenges, noting how the Russia-Ukraine war has significantly influenced inflation trends. Although Türkiye has overcome several macroeconomic hurdles, he acknowledged that some issues, such as inflation, would “require more time to address.”

Addressing economic conditions, Şimşek mentioned Türkiye’s previous large current account deficit, which has now decreased. The budget deficit, excluding earthquake expenditures, has been reduced to 1.6% of GDP after being brought under control.

He projected that inflation in Türkiye is expected to “fall to single digits” by the end of 2026, drawing on the experiences of countries worldwide that have also tackled inflation. He attributed the expectation to the economic administration’s tight monetary policy and fiscal discipline.

Şimşek referenced an International Monetary Fund (IMF) study, warning that trade fragmentation could reduce global GDP by up to 7%, a potential impact "equivalent" to the GDPs of Germany and France.

Despite the risk of trade fragmentation, Şimşek emphasized Türkiye’s resilience, pointing to its full Customs Union with the EU.

“The Customs Union we have with the EU ensures we trade based on rules. So, in a sense, we are friends. As for friendshoring with the EU, the Customs Union makes the EU our friend. Our neighbors in Central Asia, the Balkans, North Africa, or the Middle East, we consider them friends,” he stated.

Discussing the benefits of nearshoring, Şimşek noted that Türkiye has gained from post-pandemic supply chain diversification.

"Geographically, Türkiye resembles the center of the Earth: we are close to Europe and a rapidly developing neighborhood. Of course, we benefit from highly competitive demographics and a skilled workforce," he added.

Şimşek also highlighted Türkiye has attracted $70 billion in foreign direct investments (FDI) over the past two decades, showing the long-term advantages of friendshoring.

'European friends'

Şimşek stressed that Türkiye does not “suffer” from high debt levels. He explained that the global debt ratio—including private sector, household, corporate, and government debt—stands at “about 330% of GDP.” In contrast, “for emerging markets, it’s roughly 250%, and in Türkiye, it’s about 99%.

Şimşek identified high global debt levels, trade fragmentation, and unfavorable demographics as factors inhibiting global growth, aside from productivity issues.

Şimsek pointed out that Türkiye is a “sizable economy” with a national income of “$1.3 trillion,” and that the real GDP growth rate has averaged “about 5.5%” over the last two decades.

He stated that the ministry’s efforts to make Türkiye more resilient to economic shocks are ongoing.

“We have a comprehensive reform program to enhance competitiveness, productivity, and growth potential. We are open for business, dialogue, and re-engagement not only in our region but with our European friends,” Şimşek concluded.