Turkey’s Treasury and Finance Minister Nureddin Nebati once again reiterated that decisive steps are being taken to fight against inflation, which has now evolved into a global problem due to the emergence of the Russia-Ukraine war just as the world was attempting to recover from the pandemic.

The minister was speaking at the Istanbul Chamber of Commerce (ITO) Business World Meeting.

"With these steps we have taken, we will improve inflation expectations day by day," he said, adding that the measures will break the inflation "inertia" in Turkey's economy.

Yearly inflation in Turkey hit 61.14% in March, according to the country's statistical authority, climbing to a new 20-year high.

The figure was 54.4% in the previous month and 16.19% in March 2021, according to the Turkish Statistical Institute (TurkStat).

Rising prices are part of an economic crisis exacerbated by the COVID-19 pandemic. Meanwhile, Russia’s invasion of Ukraine has seen a surge in gas, oil and grain prices.

Turkey’s runaway inflation also follows a series of interest rate cuts late last year.

The central bank cut rates by 5 percentage points between September and December, but they have remained unchanged at 14% this year.

Inflation tops U.S. meetings

Nebati, who last week attended the meeting of G-20 finance ministers and central bank governors as well as the International Monetary Fund (IMF) and World Bank spring meetings in Washington, said that the most important agenda item during the meetings was inflation and that this problem would be discussed more.

The second agenda point in the meetings was the downward revisions in global growth forecasts due to the Russia-Ukraine war, Nebati said.

The tightening of central banks' monetary policies increasing borrowing costs in developing economies was the third most important item on the agenda, he said.

Nebati said he held productive meetings with the ministers and central bank governors of a number of countries, investors and managers of international organizations.

Stating that he once again emphasized the importance of global cooperation and coordination against problems, Nebati commented on the meetings.

Noting that they met with real sector and portfolio investors at three different investor meetings organized by the American Chamber of Commerce (AmCham), the Business Council for International Reconciliation (BCIU) and JPMorgan, Nebati said they provided international investors with comprehensive information about the opportunities Turkey provides and shared the latest developments in the Turkish economy and investment environment in the country.

"In the meetings, investors shared their strong belief in Turkey's investment potential with the contribution of regional imbalances and the geographical opportunities created by the pandemic. Many companies made it clear to us that they want to increase their investments in Turkey by taking advantage of these opportunities," he said.

Record-high exports

Nebati stated that although the war has had a negative impact on Turkey's exports to Russia and Ukraine, these countries had only a 3.9% share of total exports and that the overall effect would be limited.

Turkey has had no difficulties in developing new models thanks to the market and product diversity provided in exports in the last two decades, Nebati said, adding: "As a matter of fact, we reached the highest export figure of all time in March despite the war. We will continue to announce these records every month."

Stating that the import coverage ratio of exports excluding energy increased to 98.2% in March, Nebati said: "This figure tells us that exports-imports excluding energy are balanced. The cost of the energy we imported last year disrupts our balance."

Noting the high level of visitor inflow on the tourism side that is set to continue to increase, Nebati emphasized that there has been very good data in the last two months.

'Capital input will increase'

The finance minister went on to say that Turkey's successful Eurobond and sukuk issuances were praised at the meetings.

"Following our contacts with investors in London in February, the feedback we received at the Washington meetings indicates that they have a very positive view of Turkey and that capital inflows to our country will increase in the coming period."

"Investors are convinced that 'Turkey's success story' will attract more and more attention."