Treasury and Finance Minister Mehmet Şimşek on Thursday evaluated Türkiye's and global economic conditions and said he expected lower global economic growth in 2024, highlighting the importance of implementing a new medium-term program (MTP). He also noted they expected to see a decline in inflation as of the second half of this year.
Attending the "2023 Evaluation and 2024 Expectations" meeting organized by the Independent Industrialists and Businessmen Association (MÜSIAD) in Ankara, the minister provided the comprehensive economic outlook constituting monetary policy and inflation expectations in different regions including the United States, the European Union and China.
Regarding the situation in Türkiye, he noted that the growth remained strong in 2023.
"If we achieve our MTP target of 4.4% growth, Türkiye will grow 1.5 times the global average growth if you compare it with the Organisation for Economic Co-operation and Development (OECD) data," he said.
"Therefore, 2023 is a year in which Türkiye grew relatively strongly. We have seen a second half in which rebalancing, the composition of growth has evolved toward a more balanced one. Third quarter data shows this clearly. This probably continued in the fourth quarter," he explained.
The economy expanded by a more-than-expected 5.9% year-over-year in the third quarter, accelerating from an upwardly revised 3.9% growth in the second quarter and 4% in the first, according to the official data.
The minister further said that "inflation is high" but in line with Türkiye's medium-term program, and it would fall, adding that uncertainty in trade continues. "On the one hand, there are wars; on the other hand, there is protectionism and geopolitical tensions. Commodity prices will also likely be volatile," he said.
The minister added that the monthly increases in the headline and core inflation align with the targets set out in the medium-term program.
Türkiye's annual inflation increased slightly to 64.77% in December, official data showed Wednesday, but it remained below the central bank's year-end target of 65% for 2023.
Türkiye has embraced more conventional policymaking after the May elections and delivered aggressive monetary tightening aimed at countering inflation, reducing trade deficits, rebuilding foreign exchange reserves and stabilizing the Turkish lira.
The central bank shifted in policymaking, bringing its one-week repo rate to 42.5% from 8.5% to tame inflation and cool demand.
The bank, however, decided to downshift tightening with a 250 basis points hike in its last committee meeting last month and said, "It will complete the tightening cycle as soon as possible."
Stating that they will implement the MTP with determination, Şimşek said: "By embracing this program, we are looking for 'how can we turn these conditions into opportunities for Türkiye' at a time when such difficult global conditions are the new normal. We are not an island; we are a part of the world, and the trends in the world affect us."
Underscoring the need to implement the MTP, a new economic road map unveiled by the government last September, with patience, success, determination and the support of all segments of society, the minister said that then there could be great opportunities for Türkiye.
The minister was also quoted by local media as saying that they expected an increase in the credit score while also highlighting the registered surge in the central bank's reserves of $47 billion from the end of May.
"Predictability has increased relatively. We expect an increase in the credit score, and updates to the outlook have begun. Access to long-term financing has begun. We have started to lay the foundations for sustainable high growth," public broadcaster TRT Haber quoted Şimşek as saying.
In August, international credit rating agency Moody's revised its forecast for Türkiye's economic growth for 2023 to 4.2% from 2.6% and to 3% from 2% for 2024. Analysts expected Moody's to upgrade Türkiye's credit rating and outlook soon.
In September, Fitch Ratings revised its outlook for Türkiye from "negative" to "stable" and affirmed its "B" rating, while S&P Global last month revised its outlook from "stable" to "positive."
"We have made progress in controlling inflation. Annual declines, we have been saying (it) since day one, the second half of 2024," he said. "The reason is very simple: Monetary policy works with a delay. You are taking precautions today, but it takes time for those measures to be reflected," noted Şimşek.