Mehmet Şimşek: Economy Program Overcame Two Shocks in March and April, Proving Its Resilience

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Insights from Minister of Treasury and Finance Mehmet Şimşek on the Current Economy

In a recent live broadcast on NTV, Minister of Treasury and Finance Mehmet Şimşek shared comprehensive insights into Turkey’s economic trajectory, emphasizing the resilience and adaptability of the nation’s financial policies.

He highlighted that the existing economic program has demonstrated its robustness, especially in navigating two significant shocks—one internal and one external—that occurred during March and April. According to Şimşek, the economy skillfully managed the turbulence experienced in March, showcasing the effectiveness of ongoing strategic measures.

What is the current inflation outlook?

Şimşek explained that a deliberate de-inflation strategy has been actively pursued over the past year. As a result, inflation rates have shown substantial improvement, decreasing by approximately 40 percentage points within this period. As of May, producer inflation has fallen to 28.7%, signaling positive momentum.

He further noted that the inflation rate for essential goods has declined to around 20%, contributing to overall price stability. However, he pointed out that one of the primary factors sustaining higher inflation levels is the service sector. For instance, apart from rent-related inflation, service prices have decreased significantly—from a peak of 97% down to 43%.

Şimşek attributed part of this slowdown to the implementation of a 25% cap on rent increases, which has limited the escalation in housing costs. Similar measures were applied to the education sector, helping to temper inflationary pressures.

He expressed confidence that Turkey is currently in a phase of sustained decline in inflation rates, with projections indicating that inflation will close this year within the 20s range. The Minister reassured that the government remains very optimistic and comfortable with this outlook.

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