Turkish Finance Minister Şimşek reportedly signals 2026 for economic recovery

Turkish Finance Minister Mehmet Şimşek has reportedly pointed to 2026 for the country's economic recovery. Şimşek said they expect the inflation rate to peak around 60 percent at the beginning of 2024, Nuray Babacan from Gazete Pencere reported.

Friday August 11 2023 01:48 pm

Photo: AA

Duvar English

Treasury and Finance Minister Mehmet Şimşek has reportedly signalled 2026 for the economic recovery and said "We will see positive developments in the economy as of 2026. In two and a half to three years we will be in a better position than today."

During the recent meetings with foreign capital representatives, business world and the Justice and Development Party (AKP) management, Şimşek said there will be an influx of foreign capital into Turkey but it will take time, according to reporting by Nuray Babacan from Gazete Pencere.

“The Gulf capital is coming, but European countries want to observe a little more what we will do. It is necessary to build trust,” Şimşek accordingly said.

Şimşek also said they introduced the recent series of tax increases because of the deadly Feb. 6 earthquakes that struck southeastern Turkey. “The cost of the earthquake is more than $100 billion. It is not possible for us to meet this in the current economic picture. We had to introduce tax increases.”

He added that the August month will be financially difficult “because the treasury has loads of payments.”

Accordingly, Şimşek also said they expect the inflation rate to peak around 60 percent at the beginning of 2024, then it will start to fall.

The Turkish Statistical Institute (TÜİK) reported an annual inflation rate of 47.83 percent in July, whereas the independent inflation group ENAG put the figure at 122.88 percent.

“The share of indirect taxes should be reduced. Indirect taxes have a large share in tax revenues in Turkey. I had worked on reducing indirect taxes during my previous ministry. It did not come into effect. The system in England should be in Turkey. It should be a system based on declarations. If it is said to switch to this system, I will complete the preparations within a year and pass immediately,” Şimşek also said.

In what was seen as a pivot to economic orthodoxy, President Recep Tayyip Erdoğan appointed Mehmet Şimşek as finance minister and Hafize Gaye Erkan as central bank governor after his re-election in May. Erdoğan holds the unorthodox view that high interest rates cause inflation.