Mehmet Şimşek pointed to Erdoğan! Will there be a U-turn in the economy?

Minister of Treasury and Finance Mehmet Şimşek made statements at the ‘Istanbul Chamber of Industry January Assembly Meeting’.

Minister Şimşek said, “Structural reforms are indispensable for the program. Structural reforms will play the main role in achieving the goals and making them permanent.”

Şimşek explained the 3 goals of economic management with the following words: “The main goal of the MTP is price stability. You cannot talk about predictability in a place where there is no price stability, it is not a sustainable and competitive industry. Our second goal is the establishment of fiscal discipline, and the third is a sustainable current account deficit.”

Emphasizing the political ownership of the economic program, Şimşek said, “This program is a program with political ownership. It was prepared by a team under the leadership of our President. This program is not a temporary fad.”

The highlights of Minister Şimşek’s statements are as follows:

We are in a period where global growth is slow. Growth in the Eurozone will strengthen somewhat in 2024, and this recovery, although small, is supportive for our industry. The fact that global inflation is decreasing has increased the expectations for interest rate cuts by the Fed and ECB in 2024 and 2025.

Protectionist policies in global trade are not new, but they have intensified. Protectionism is not only limited to trade in goods, but even in investment and services. Protectionism has become the new normal. (OVP) The main target of the program is price stability, you cannot talk about predictability where there is no price stability, there is no sustainable and competitive industry.

“STRUCTURAL REFORMS ARE ESSENTIAL”

Our second goal is to establish fiscal discipline, and our third is a sustainable current account deficit. It is clear that there is a need for balance in growth; it is not possible to maintain growth by consuming only internally and externally.

Structural reforms are a must for the program. Structural reforms will play the main role in achieving the goals and making them permanent. We are doing the same as the Fed, the EU, Brazil and Mexico.

“IT IS A POLITICALLY OWNED PROGRAM”

There is no tension between growth and inflation. Even if there is this tension, it is short-term, cyclical and not permanent. Inflation must be low for sustainable high growth. I do not believe that inflation will fight against gravity in Turkey. It will fall.

This program will be implemented with patience and determination, it is a program with political ownership, it is a program that was submitted to the President for approval by a team, put into practice, and the implementation yielded results, it is not a temporary fad. The deep-rooted and permanent solution to financing problems lies in price stability. We will continue to limit the budget deficit in the coming period.

“BUDGET DEFICIT DUE TO EARTHQUAKE”

There is no need to worry about fiscal policy at this stage. Almost two-thirds of the spending in the budget deficit was related to the earthquake.

We need to allocate resources for structural transformation. It is important to establish financial discipline. One of the important prerequisites for lower risk premium and higher credit scores is financial discipline. The normalization in monetary policy will be at a level that will anchor future inflation.

TAX REGULATION SIGNAL

We will expand the tax base. We will make efforts in areas where taxes are not collected properly. There are currently studies, there are issues that require regulation and those that do not. We will do our best to close the budget deficit in 2024 with a budget deficit below what we envisaged in the MTP. Foreign debt must be kept at a sustainable level.

There will be additional work to transform the industry and increase the quality of the industry. “Reserve accumulation will continue, reserve accumulation should be made to reduce fragility.”