Growth potential still high, disinflation continues: Şimşek

ISTANBUL

The Turkish economy still has a growth potential and may join high-income countries within a year or two, Finance Minister Mehmet Şimşek has said, adding that disinflation has begun and is continuing.

“We are converging to European Union countries in terms of per capita income,” the minister said, speaking at an energy conference in Istanbul.

The government is implementing the economic program with determination and the program works, he added, reiterating that the ultimate aim of the program is sustainable high growth.

The Turkish economy expanded by 2.1 percent in the third quarter of 2024, slowing from 2.4 percent in the previous quarter.

The government is creating fiscal space for reforms, Şimşek said, noting that the budget deficit will narrow next year, which will support the disinflation process.

The Central Bank’s reserves are no longer a concern as the net reserves have reached over $50 billion, according to the minister.

“We do not have an implicit or explicit exchange rate target. This is my message to the market,” Şimşek said.

He acknowledged that Türkiye is facing serious inflation and cost of living problems, but the economic program is designed to address those issues.

The annual inflation rate slowed from 48.6 percent in October to 47.1 percent in November with consumer prices rising 2.24 percent monthly.

The improvement in the current account is not a temporary one, according to Şimşek.

In the medium term, with structural transformation, the current account balance would keep posting surplus, he said.