Minister of Treasury and Finance Mehmet Şimşek stated that he does not believe the recent turmoils will have a lasting impact. He emphasized that inflation has clearly decreased. Regarding developments in foreign trade, Şimşek mentioned, “We will be relatively less affected, as the domestic market is determinant for us.”

Minister Şimşek is speaking at the IV. Agricultural Forestry Council “Agricultural Economics Workshop” program in Ankara. Highlights of Minister Şimşek’s remarks include: A significant part of exports, excluding rule-based countries, goes to such geographies, so despite protectionism in foreign trade, we will be relatively less affected compared to similar countries like us. Turkey’s dependency on exports is low compared to similar countries. Our GDP has been generated based on domestic demand rather than export-based approach. The impacts on us will be more limited compared to other countries, as the domestic market is determinant for us. We have free trade agreements with a total of 54 countries outside the US and EU, with 68% of exports going to these countries. More than 80% of our exports go to close and friendly countries.

“WE HAVE CONTROLLED INFLATION” The ratio of gross debt to GDP in Turkey is at 93%, well below the world average. Our program has a goal; sustainable high growth and fair distribution, aiming for price stability, that is bringing inflation down to single digits and fiscal discipline. The essence of the program is a structural transformation program that will make the gains permanent. We are facing a serious inflation issue, but we first contained inflation. It was a containment period, and we entered into a disinflation period starting from the second half of 2024. WILL THE DECREASE IN INFLATION CONTINUE? There is success in disinflation, and we are closely following the program. I do not think the recent turmoils will have a lasting impact. There is rigidity in service inflation, we raised the upper limit by 25% in rentals, there is no intervention in education. Inflation is clearly decreasing and will continue to decrease because it is our top priority. We aim to reduce the budget deficit this year, and there may be a greater slowdown in growth than we anticipated. A value depreciation of around 3-3.5% in the lira against the dollar may have a limited impact in April. But in the medium term, looking beyond 1 year, it is disinflationary. One of our top priorities is food supply. This is one of the most important aspects of the program. Activating the food supply chain and logistics is a crucial topic. FALL IN OIL PRICES We expect the current account deficit to increase. Due to global developments, oil prices plummeted, and if oil prices stay at these levels, there will be no current account deficit issue. Turkey is among the countries most positively affected by the decrease in oil and gas prices. We created nearly a million net new employments in 2024. Unemployment rates are rapidly decreasing. The unemployment rate for men is at its lowest level in history. Thanks to this program, we reduced vulnerabilities and increased resilience against internal and external shocks. RESPONSES TO RESERVE CRITICISMS They criticize why reserves are being used. Reserves are a cushion against shocks, of course, reserves are accumulated to be used. Foreign currency protected deposits were an important conditional obligation for Turkey. Reducing this means reducing uncertainties related to Turkey. We brought it down below 22 billion dollars, and the exit from CBRT is successfully maintained through the program without causing volatility and issues in the markets.

INCREASE IN TURKEY’S RISK PREMIUM Some attribute this recent increase to 1-2 weeks of volatility. No, look at the past 3-4 days, with many countries’ CDS increasing more than us due to protectionist measures announced by the US. We have shown a very good performance compared to similar countries like us. Our energy dependence will decrease significantly in the coming years.