‘2025 will be year of disinflation’: Turkish Finance Minister Simsek

Turkish Treasury and Finance Minister Mehmet Simsek announced that Türkiye’s primary goal is to achieve single-digit inflation, emphasizing the government’s determination to reduce inflation.

“We are very committed to lowering inflation. 2025 will be the year of disinflation,” he stated during a joint broadcast on A Haber and A Para.

Global market volatility, US economic risks

Simsek likened the current global market volatility to a temporary panic attack, noting that the epicenter is Japan, but its effects are global. He pointed to the U.S. economy’s risk of recession as a key trigger factor, noting, “If there is an economic slowdown and company profitability does not support it, a correction can be expected.”

The minister highlighted that borrowing in Japanese yen has been very cheap for a long time, with a common trade being to borrow yen, convert it to dollars, and invest in U.S. stocks. Recently, the yen has appreciated against the dollar, rising by about 13% in July, which has led to increased interest rates in Japan.

Impact on Türkiye’s economy

Simsek discussed how these global developments could affect Türkiye. He noted that a global economic slowdown could negatively impact risk appetite, including Türkiye’s. However, he also emphasized that falling oil and commodity prices could positively impact Türkiye’s current account deficit and inflation.

The minister pointed out that easing global financial conditions would benefit emerging markets like Türkiye, potentially affecting capital flows positively. He also mentioned that Türkiye does not have excessive foreign positions, which could help mitigate the impact of market turbulence.

Commitment to reducing inflation

Reflecting on the reform and stability program shared with the public last September, Simsek stated that the primary goal is to relieve citizens from the burden of high living costs.

He emphasized the commitment to achieving single-digit inflation and noted that the program includes a transitional period of one year, with a full implementation over three years. Simsek expressed optimism about the continued decline in annual inflation, aligning with the program’s projections.

Structural reforms and financial stability

Simsek highlighted the importance of structural reforms and financial stability, noting that Türkiye’s economy could benefit from easing global financial conditions. He also mentioned that Türkiye’s economy is undergoing a period of disinflation and fundamental restructuring, which could help the country withstand global economic challenges.

International credit ratings, investments and more

The minister addressed international credit rating agencies’ recent upgrades of Türkiye’s ratings, noting that Türkiye is the only country among the world’s leading credit rating agencies to receive a rating upgrade this year. He expressed confidence in Türkiye’s ability to achieve investment-grade status more quickly due to the strong reform program and financial discipline.

Simsek stressed the critical importance of reducing the informal economy, declaring the government’s intention to intensify its efforts to address this issue. He emphasized that tackling informality is crucial for maintaining budgetary control and mitigating the financial consequences of recent policy changes.

The minister reaffirmed the government’s commitment to fiscal discipline, noting that public spending will be directed toward more productive areas. He highlighted the importance of maintaining budgetary discipline and reducing the current account deficit to sustainable levels.