Türkiye’s Economy Shows Increased Resilience, Says Finance Minister Şimşek in London

Treasury and Finance Minister Mehmet Şimşek highlighted Türkiye’s improving macro-financial stability and structural reform momentum during a two-day investor roadshow in London.

Investor Confidence Grows as Structural Reforms Advance

Speaking to institutional investors from the real and financial sectors, Mehmet Şimşek underscored that Türkiye’s economic stabilization program has proven resilient in the face of recent global shocks. According to remarks conveyed by state-run Anadolu Agency, the minister outlined progress in curbing inflation, strengthening reserves, and restoring investor confidence.

“The disinflation trend continues,” Şimşek said. “Inflation is expected to stay within the Central Bank’s forecast range by year-end.”

He added that the current account deficit has narrowed to sustainable levels and that both the external debt-to-GDP ratio and gross financing needs have declined significantly.

Lira Volatility Falls as FX Reserves Rebound

One of the major talking points in Şimşek’s London meetings was Türkiye’s successful exit from the controversial currency-protected deposit (KKM) scheme. Introduced in 2021 to stabilize the lira, the program has been gradually phased out as macroeconomic stability returned.

“Reserve adequacy has been achieved,” Şimşek told investors. “Since early May, reserves have risen, and Turkish lira volatility has markedly declined.”

While the KKM mechanism provided short-term relief during the 2021 currency crisis, it came at a heavy fiscal cost and complicated monetary policy. Its rollback marks a critical milestone in Türkiye’s normalization of macroeconomic management.

Fiscal Discipline Holds, Even Amid Revenue Shortfalls

Şimşek noted that fiscal discipline remains intact, even if budget revenues may fall slightly below the targets outlined in the government’s Medium-Term Program. The disinflation process, he said, is advancing in tandem with these efforts.

Structural Reform: Green and Digital Transformation at Forefront

Türkiye is pressing ahead with structural reforms, including green and digital transformation initiatives, active industrial policies, and new regional development strategies.

The minister also emphasized the potential of a “Terrorist-Free Türkiye,” suggesting that ongoing security gains in Eastern and Southeastern Anatolia could serve as a foundation for economic revitalization and regional integration.

Türkiye Positions Itself as a Regional Investment Hub

Şimşek pitched Türkiye as a competitive and strategically positioned destination for foreign direct investment, highlighting the country’s:

• High-value-added manufacturing capabilities

• Advanced physical infrastructure

• Young and dynamic labor force

• Strong regional supply chain integration

“Relative to per capita income, our industrial production value-add puts us ahead of many peers,” Şimşek stated. “Türkiye is the leading production hub for our region across both goods and services.”

He also met with executives of Turkish companies operating in the United Kingdom to reinforce business ties and diaspora engagement.

Background: From Crisis to Stabilization

Since mid-2023, Türkiye has been implementing a comprehensive economic stabilization program, abandoning unorthodox monetary policies in favor of orthodox tightening, budgetary restraint, and reform. These efforts aim to rebuild credibility among international investors and rating agencies after years of volatility and inflationary pressures.

The latest investor outreach comes amid heightened political tensions at home, including mass detentions of opposition CHP mayors, ongoing lawsuits targeting the main opposition party, and growing scrutiny from the EU and global rights organizations—factors that may influence long-term investor perceptions.

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