Turkish economy on right track, says Finance Minister

ISTANBUL: Turkey’s monetary policy set in place is fully functional and the policy mix going forward will be more supportive, but more time is needed to see its effects and convince society at large, Finance Minister Mehmet Simsek said on Thursday.

“We’re doing all the right things, we’re on the right track, but we need time to show results, to convince the broader society,” Simsek said at an event on the sidelines of the International Monetary Fund/world Bank spring meetings in Washington. Simsek said part of the structural transformation of Turkey’s economy goes along with a new industrial policy, which he said will be “prety transparent and rules-based.” “We want to channel resources to more productive areas, to reduce our carbon footprint, to make the economy more competitive, but also to see how we can enhance growth potential to higher productivity,” Simsek said.

“When it comes to economic complexity, we know where we stand in the value chain. We’re not where we would like to be, and that’s why the reform comes in.”

Turkey will take steps to strengthen its medium-term economic programme and the three main priorities are to increase public savings, prioritise investments and accelerate structural reforms, President Tayyip Erdogan said.

Speaking on Tuesday evening ater a cabinet meeting, Erdogan said his economic team had made preparations for such steps to strengthen the programme (MTP) and, “hopefully we will share them with the public very soon.” Moody’s recently revised Turkey’s outlook to positive from stable, citing the decisive change to the country’s monetary policy.

Since President Tayyip Erdogan won reelection in May, authorities have abandoned the unorthodox low interest rate policy in favour of a sharp policy tightening.

The ratings agency said the policy pivot now improves the prospects for bringing down the country’s currently very high inflation rates to more sustainable levels, the agency said. Advertisement ·

“While headline inflation is likely to rise further in the near term, there are signs that inflation dynamics are starting to turn, indicative of monetary policy regaining credibility and effectiveness,” Moody’s said. Turkey’s annual inflation rate climbed to 64.77% in December, sustaining an upward trend that is expected to continue in coming months ater a big rise in the minimum wage.