Turkey faces 'serious inflation issue, but on right track,' minister says

Finance Minister Mehmet Şimşek said Turkey faces "serious inflation" but claimed the newly adopted program has created a "significant downward trend" that was expected to continue.

Tuesday December 24 2024 10:40 pm

Duvar English

Turkey’s Treasury and Finance Minister Mehmet Şimşek on Dec. 24 acknowledged that the country faced a “serious inflation and high cost of living issue,” at an economics conference in Istanbul.
However, Şimşek claimed that Turkey is well-positioned among developing countries and has the potential to join the high-income group “within a year or two.”

Addressing the dollar exchange rate, Şimşek said, "We have neither an explicit nor an implicit exchange rate target. This is my message to the markets: we do not and cannot have a rate target.”

As part of the program, the minister noted that there has been a substantial flow of funds, with the treasury having to purchase $110 billion in foreign exchange. “Despite this, we managed. It’s not easy; managing fund flows requires an entirely different skill set."

Highlighting the issue of high living costs in Turkey, Şimşek stated that the main goal of this program was to ensure “price stability.”
Inflation at the beginning of 2024 was around 60%, and the minister expected to close the year with around 45%, which would not be a “bad outcome.”

“The challenge is making this permanent. There was rigidity in service inflation, but that has started to ease. In this regard, 2025 will be much more supportive. Inflation is on a significant downward trend, and this will continue," the minister stated.

Commenting on the housing sector, Şimşek noted that the government would increase housing supply and make it easier for citizens to “rent or own homes at reasonable prices."

On the issue of reserves, Şimşek stated that it was no longer a concern, adding that net reserves had reached approximately $50 billion.