Turkey Targets 21% Inflation as Minister Şimşek Outlines Economic Roadmap

Treasury and Finance Minister Mehmet Şimşek has announced Turkey’s inflation target, stating that the government aims to bring inflation down to 21% through supply-side policies and fiscal discipline.

Speaking at the 7th Ordinary Congress of AK Party Ankara Women’s Branches, Şimşek highlighted the government’s economic achievements and outlined future strategies to stabilize the economy.

Key Economic Measures & Progress

  • Reducing Fragility & Strengthening the Lira:
    Şimşek emphasized that Turkey has significantly reduced its current account deficit, which was a key factor in the Turkish lira’s vulnerability. This has led to increased confidence in the currency.
  • Record-Level Reserves:
    The country’s foreign exchange reserves have reached historic highs, contributing to greater financial stability. Additionally, Currency Protected Deposits (CPD) have been cut from $144 billion to less than $30 billion, further reducing risks.
  • Budget Deficit Reduction:
    Addressing fiscal discipline, Şimşek noted that despite the economic strain from the Kahramanmaraş earthquakes, the government will start reducing the budget deficit next year.
  • Strict Expenditure Control:
    He stated that in 2024, the government saved 1.2 trillion liras through disciplined spending. “In previous years, when our budget was 100 liras, we spent 109 liras. Last year, we didn’t even spend 97 liras,” he noted, adding that this approach helps redirect funds towards education, health, infrastructure, and social assistance instead of interest payments.

Inflation Reduction Plan

Şimşek reaffirmed the government’s commitment to combating inflation, highlighting:

  • Inflation dropped from 65% in 2023 to 44% in 2024.
  • The goal is to lower it to 21% by the end of 2025.
  • Policies focus on boosting production and exports, rather than relying on consumption-driven growth.
  • Exporters will benefit from reduced credit costs to stimulate economic activity.

Additionally, the Ministry of Environment and Urbanization is preparing a social housing campaign to assist low-income groups, a move Şimşek described as essential for sustainable growth.

Economic Outlook

Şimşek concluded by emphasizing that Turkey’s economic program aims to improve resilience against external shocks, reduce vulnerabilities, and enhance long-term stability. With these measures, the government is optimistic about achieving its 21% inflation target while ensuring sustainable economic growth.