Officials on Monday emphasized what they said were positive outcomes of the government's policies after official data showed Türkiye's current account balance posted a second straight surplus and the unemployment rate plunged to the lowest level in 11 years.
Türkiye's new economy administration shifted to more conventional policymaking after the May elections and embraced aggressive monetary tightening to cap strong domestic demand, one of the main reasons for higher imports, and to stem double-digit inflation.
The government has also sought to rebuild foreign exchange reserves, and boost investments and exports to improve the current account balance.
Central bank data showed that the balance registered a surplus of $186 million (TL 539.2 million) in October. In September, the surplus was $1.91 billion, driven by strong tourism revenues and a narrower trade deficit.
The current account is the most complete measure of trade because it includes investment flows and trade in merchandise and services. A deficit means Türkiye is consuming more from overseas than it is selling abroad.
The September-October readings mark the first two straight surpluses since a four-month streak between July and October 2021.
Treasury and Finance Minister Mehmet Şimşek attributed it to the government policies to achieve balanced growth.
"The annual deficit has decreased by $9.6 billion compared to May," Şimşek wrote on social media platform X, formerly Twitter.
The current account shortfall stood at nearly $40.7 billion from January through October, the central bank data showed.
The 12-month rolling gap fell to $50.7 billion from $51.7 billion in September. Excluding gold and energy, the balance posted a surplus of $34.9 billion.
Trade Minister Ömer Bolat also noted the positive trajectory and said the momentum is expected to maintain pace.
Bolat cited the data showing the balance, excluding gold and energy, saw a net surplus of $5.1 billion in October.
"We expect the decrease in the trade deficit to continue to contribute positively to the current account in November," Bolat said.
"In the upcoming period, we anticipate a continued decline in the annualized current account deficit."
Ankara said in September it expects a shortfall of $42.5 billion this year from last year's $48.8 billion, which was largely driven by energy and gold.
The government's economic roadmap forecasts see the gap falling to around $34.7 billion, or 3.1% of gross domestic product (GDP), in 2024, down from about 4% projected for this year.
Şimşek earlier said the deficit is expected to shrink to around $40 billion in December due to a slowdown in consumer loan growth and a sharp rise in tourism revenues.
Record reserves
"Thanks to the decline in the current account deficit and the increased international investor interest in our country, our reserves have reached a historical high of $140 billion," Şimşek said Monday.
Total reserves have rebounded since early June and rose $3.7 billion last week alone, bringing the overall increase since after the presidential elections to over $41.5 billion.
Alongside Şimşek, a former Merrill Lynch banker, the new economy team also includes Hafize Gaye Erkan, a former U.S.-based bank executive, who took over as central bank governor in June.
The government's medium-term economic program features policies that require tighter monetary policy to rein in stubbornly high inflation, which runs at nearly 62% and is expected to peak by May next year before dipping.
Under Erkan's tenure, the central bank has hiked its main interest rate from 8.5% to 40%.
The bank also adjusted a raft of credit rules and pledged further tightening to fight inflation, while the government has introduced tax and fee hikes to boost budget income.
Disinflation to accelerate
On Monday, Vice President Cevdet Yılmaz reiterated the determination and stressed the government would "decisively utilize all policy tools" to bring inflation to single-digit levels.
Yılmaz stated that the tightening, along with selective loan applications and the simplification of the macroprudential framework, aimed to control the deterioration in inflation expectations and pricing behaviors.
He noted that with "transparent and reliable" coordination between monetary and fiscal policies, a significant annual decline in inflation is expected after the second half of 2024.
"From this period onward, a permanent disinflation process is anticipated to begin," Yılmaz told the Parliament.
Addressing a separate event on Monday, President Recep Tayyip Erdoğan said, "Inflation's fire has started to subside," stressing that "we will encounter even better rates in the coming months."
Yılmaz stressed that the downward trend would further accelerate as of 2025.
"By ensuring the persistence of disinflation policies, we will transition to a period of stability in 2025; the decline in inflation will accelerate, predictability will increase and by 2026, inflation will once again be reduced to single digits," Yılmaz noted.
Single-digit unemployment
Şimşek suggested that the implemented policies reduced vulnerabilities and established sustainable growth centered on investment, employment, production and exports.
Despite the positive trajectory, he acknowledged the challenge posed by weak demand from trading partners, limiting export growth. The trends in industrial production largely reflected this constraint, he added.
Separate data on Monday showed Türkiye's industrial output expanded 1.1% year-over-year in October, the slowest pace in four months. Month-over-month, the production dropped 0.4%.
Şimşek also cited the data that showed Türkiye's unemployment rate fell to 8.5% in October, the lowest level in the last 11 years.
"Our policies are yielding results every day and we will continue to achieve our program goals one by one," Şimşek said.
Yılmaz said the unemployment rate would end the year below the medium-term program's projections.
"We expect the unemployment rate for the overall year of 2023 to be realized at a level lower than the projected 10.1% in the MTP, reaching a single-digit figure," the vice president said.