VP Yılmaz: Inflation will decrease after June

ANKARA

Inflation in Türkiye was higher than expected in January and February due to various reasons, but will gradually lose momentum in March, according to Vice President Cevdet Yılmaz.

"We do not expect a significant decline in annual inflation until May, but we will see a significant decline starting in June," Yılmaz said in his speech at the 60th anniversary ceremony of the Ankara Chamber of Industry (ASO).

Yılmaz also said rumors that economic measures would be changed after the March 31 local elections were unfounded.

"Local elections are not elections where macro policies are likely to change," he added.

"Local elections are local elections, they are elections about the local services of our province and city. Therefore, I would like to state that the discussions about our macro policies on the occasion of these local elections have no basis and consist of some speculative discourses."

The essence of the macro policy pursued by the government in the recent period is to "curb excessive consumption," Yılmaz said.

"The aim is to ensure a more moderate increase in consumption in order to balance domestic and foreign demand," the vice president said.

"We are in the process of improving the composition of our growth from consumption-weighted growth to an investment- and export-weighted growth structure."

On a quarterly basis, the share of consumption spending in growth is still high, but its contribution is declining, while investment and exports are contributing more, Yılmaz pointed out.

"Inflation is our main problem, we need to continue the fight here with determination in the medium and long term," he said.

"January and February were slightly above expectations for various reasons, but it will gradually lose momentum in March. We do not expect a serious decline in annual inflation until May. In the summer months, starting in June, we will see significant declines in annual inflation. Our forecast for 2025 in the Medium-Term Program is around 15 percent; we have made all our plans accordingly so that we will see single digits again in 2026.”

Yılmaz recalled that the current account deficit reached up to $60 billion in mid-2023 and dropped to $45 billion at the end of the year.

"In January this year, we see that it decreased to $37.5 billion," he added.

"If we make a preliminary assessment based on the February data, we can easily say that it will fall even further. Our current account deficit will probably come down to 32, 33 billion dollars, which is also very pleasing."

Speaking at the same ceremony, ASO President Seyit Ardıç said 2024 is a very critical year for the Turkish economy.

"It is very important to continue the disinflation program without compromise and improve the investment climate to pave the way for domestic and foreign investors," he said.

"We observe that economic policies are set within a rational framework, which provides a strong basis for the goal of macroeconomic stability. We stand by our government's strong will in this regard."