Minister of Treasury and Finance Mehmet Şimşek stated that inflation is still high but deflation will continue.

Minister Şimşek spoke at a conference in Saudi Arabia aimed at emerging market economies. He mentioned that the decrease in inflation and the reestablishment of fiscal discipline are mainly locally sourced challenges. Şimşek pointed out that while inflation is still high, it is declining, saying, “Deflation will persist, and this is key for further improvement in expectations.”

Highlighting that last year they managed to reduce the current account deficit to around 0.7% of GDP, Şimşek stated, “It may slightly expand this year, but it will remain manageable.” He also mentioned that approximately 74 billion dollars have been spent on earthquake reconstruction in the last two years, equivalent to more than 6% of GDP. “Therefore, the budget deficit as a percentage of GDP has been around 5% in recent years, relatively high by Turkish standards. This year, we aim to reduce it to around 3%,” he said. Minister Şimşek noted that both a strong dollar and high long-term US Treasury bond yields have negative implications for emerging markets.