Annual inflation in Türkiye is expected to fall below 50% in September, a top official said on Saturday, highlighting an improving outlook that began with a period of disinflation in June.
Due to the base effect and the favorable impacts of the economic program, the August annual inflation rate is likely to come in at around 50%, Vice President Cevdet Yılmaz said, while addressing the fair in the western province of Izmir.
"When the September inflation comes out, we will see below 50% inflation rate," he added.
In July, the inflation rate in Türkiye dropped to 61.78% from 71.6% a month earlier, marking the first steep decline ahead of anticipated easing throughout the remainder of the year.
The median estimate of nine economists in a Reuters poll saw annual inflation falling to 52.2% in August, corresponding to the similar expectations of 11 economists polled by Anadolu Agency (AA).
The Turkish Statistical Institute (TurkStat) is due to announce the figures on Tuesday, just a day after the latest data that will reveal economic growth figures for the second quarter.
Key components of the Turkish economy are improving, including the current account deficit and budget deficit to gross domestic product (GDP) ratio, according to the vice president.
"We are in a period where the current account deficit and budget deficit are decreasing, our risks are decreasing, and stability is increasing," Yılmaz said.
Starting his speech, he recalled that the Turkish economy was the 17th largest in the world and 11th largest in terms of purchasing power parity, with a national income that exceeded $1.1 trillion.
Pointing to the weak demand conditions in foreign markets, including the European Union, which is one of Türkiye's main trading partners, along with rising geopolitical tensions in the region, Yılmaz further stated that despite these difficulties they managed to increase the exports.
"As of July, our exports have increased to $261.5 billion. We are in the process of decreasing imports. There is a serious improvement in our current balance with increasing exports and decreasing imports," he explained.
Highlighting the current account balance as one of the critical elements, the vice president noted that the current account deficit has regressed from around 6% in the same period last year to below 2% at the moment, expressing expectations for the figure to remain below 2% at the year-end.
"What does this bring? It reduces our need for foreign exchange, it reduces the need for external borrowing. It relieves the pressure on foreign exchange. In this respect, it is very valuable," said Yılmaz.
Budget deficit
Turning to the budget deficit, he noted it is expected to fall below 5% of GDP at the end of 2024, which he said marked another positive development.
"Last year, in the Medium Term Program (MTP), we had said that the budget deficit to national income ratio would be 6.4% by the end of 2023. Our realization was better than that, it was 5.3%," Yılmaz said.
The nation's budget has been considerably plagued by a sharp increase in spending after devastating earthquakes struck the southeastern region in February last year.
"We have not yet announced the current Medium Term Program this year, but I would like to express my findings on a few issues; by the end of the year, our budget deficit will hopefully be below 5%. This is a very positive development," he said.
The government is expected to unveil the new medium-term program, which will include updated macroeconomic forecasts and targets this month.
The vice president also cited other advancements including decreasing risk premiums, improvements in credit ratings and access to external finance, which he said is becoming easier.
Moreover, he touched upon the success model in the Turkish defense industry, recalling that foreign dependency decreased to levels of 20% from 80%. He also said they expected the exports from the sector which reached $5.5 billion last year to approach $7 billion this year.
Additionally, Yılmaz stated that they have put into effect support programs such as the advance loan with investment commitment and the HIT-30 Program for high-tech investments, which will lead Türkiye to become a global center of attraction, and noted that he found it very meaningful that the theme of IEF this year was technology.
The 93rd edition of the Izmir International Fair (IEF), one of the world’s oldest international general trade fairs, is taking place between Aug. 30 and Sept. 9, with the theme "Transcending Times," according to organizers.