Physical Address
Indirizzo: Via Mario Greco 60, Buttigliera Alta, 10090, Torino, Italy
Treasury and Finance Minister Mehmet Şimşek on Tuesday said Türkiye’s economic program had demonstrated resilience against shocks, pointing to falling risk premiums and a significant increase in foreign reserves.
Speaking at the Islamic Finance Summit held in London, Şimşek emphasized that the government’s medium-term program is delivering concrete results, despite a challenging economic landscape.
The program has centered on policies primarily aimed at curbing inflation and has seen authorities implement aggressive tightening measures since mid-2023.
Inflation in June eased to 35.1%, less than half the level it reached a year earlier, as tight monetary policy continued to slowly cool price expectations.
Stressing the progress, Şimşek said inflation dropped from 72% the same month of 2024.
The better-than-expected June print has renewed expectations that Türkiye’s central bank would begin cutting rates again this month.
It had initiated its easing cycle in December and last cut in March before pausing as assets and the Turkish lira fell sharply after Istanbul Mayor Ekrem Imamoğlu was jailed pending trial over graft charges.
Although the policy rate currently stands at 46%, the central bank kept the overnight rate at around 49%. The market is closely monitoring the level of overnight rates for further signals on the policy path ahead.
Authorities expanded their anti-corruption investigations over the last weekend to include the mayors of the big southern cities of Adana, Adıyaman and Antalya, run by the main opposition Republican People’s Party (CHP).
Following detentions, Türkiye’s international bonds and lira weakened on Monday, and the cost of insuring government debt against default rose.
Şimşek went on to highlight Türkiye’s long-term growth trajectory, noting that over the past two decades, the country has consistently outperformed the average growth rates of emerging markets.
The global economy is expected to grow by 2.3% to 2.5% this year, but Şimşek emphasized that this rate is not sufficient
On Islamic finance, the minister highlighted what he described as the industry’s robustness, particularly during periods of crisis.
Şimşek noted that while the sector has grown to $5.3 trillion, its share in total global financial assets remains modest at just 1%.
He underscored there’s a long road ahead for Islamic finance to reach its full potential.
Türkiye currently ranks 10th among 136 countries in Islamic finance and aims to enter the top five globally, Şimşek added.
