Global market turmoil will positively impact Türkiye: Finance minister

Treasury and Finance Minister Mehmet Simsek addressed the nation in a live broadcast, sharing insights on the country’s economic outlook amidst global financial instability.

Market turbulence

Simsek likened the current global market fluctuations to a “temporary panic attack” triggered by the appreciation of the Japanese yen against the U.S. dollar. He emphasized that such turbulence is temporary, with potential positive impacts on Türkiye due to falling oil prices.

Simsek highlighted that Türkiye’s economic narrative – centered on structural reforms and disinflation – positions it to withstand global uncertainties better than others.

The easing of global financial conditions, coupled with our narrative and falling oil prices, will positively impact Türkiye

Mehmet Simsek

What happened?

The turmoil began with disappointing U.S. economic data, including a weak jobs report and shrinking manufacturing activity. The “Sahm Rule,” a historically accurate recession indicator, is now in play, suggesting that the U.S. economy may be entering a recession.

The shockwaves from the U.S. market have reached Türkiye, where Borsa Istanbul faced significant volatility

• BIST 100 Index: Opened with a 6.72% decline, highlighting investor anxiety and global economic challenges.
• Sector performance: The banking sector experienced a substantial decline of 7.79%, with the holding index down by 5.97%.
• Circuit breaker activation: In response to the dramatic drop, Borsa Istanbul activated its circuit breaker system, halting trading temporarily to curb panic-induced losses.

Inflation outlook

Simsek acknowledged the current hardships but assured that these efforts would pay off. He expressed confidence in ending the year with inflation around 40% and reiterated the government’s commitment to reducing inflation to single digits.

We expect inflation to decrease, with significant relief by 2025 sharply

Mehmet Simsek

Future goals

• Fiscal achievements: Simsek highlighted Türkiye’s strong fiscal performance, noting that the budget and current account deficits are expected to be lower than anticipated. “Our reserve accumulation has exceeded expectations, and we are ahead of schedule in exiting the Currency Protected Deposit scheme,” he said.
• Mid-term program: The Medium-Term Program (OVP), which serves as a three-year roadmap for economic stability, remains on course without changes to its targets. Simsek emphasized that the government’s top priority is to alleviate the inflationary pressures on low-income households.
• Technological advancements in taxation: Looking ahead, Simsek revealed plans to enhance tax auditing through artificial intelligence, aiming to inspect all taxpayers comprehensively. “If AI surpasses human intelligence in the next two years, we will deploy AI tax inspectors to ensure full compliance,” he asserted.