Recent market turmoil will not have a permanent impact on Turkish economy and will not endanger the country's disinflation trajectory, Treasury and Finance Minister Mehmet Şimşek said on Monday.
The Turkish lira, stocks and bonds fell sharply following last month's detention of Istanbul Mayor Ekrem Imamoğlu, pending trial on graft charges. Authorities acted to help assets recoup some of the losses.
"Disinflation is progressing more or less in line with the (medium-term economic) program framework. I do not believe the recent market turmoil will have a permanent effect, as the tightening of financial conditions is inherently disinflationary," Şimşek told an event in Ankara.
The lira has experienced a depreciation of approximately 3%-3.5%, which Şimşek said could have a limited impact in April but stressed disinflation will continue as most of the impact of volatility will be temporary and limited.
Annual consumer price sustained its downward trend and slowed to 38.1% in March. It marked the lowest since December 2022 and extended the fall from a peak of around 75% last May.
Over the past two weeks, lira-denominated investment instruments faced major declines, while last week's hike in U.S. tariffs and counter moves have fueled unprecedented global market sell-offs.
Major global stock indexes plunged again on Monday as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans, and as investors bet the mounting risk of recession could see U.S. rate cuts as early as May.
Turkish stocks dropped more than 3% on Monday, led by banks.
Istanbul's main BIST 100 index was off 2.5% at 0850 GMT after opening down 3.4%. The banking index was down 3.35%. The BIST 100 had closed 1.10% lower at 9,379.83 points on Friday.
The lira remained relatively stable at 38.0115 against the U.S. dollar. It had touched a record 42 to the dollar after Imamoğlu's detention before authorities stabilized it.
Şimşek said there could be a slightly greater-than-anticipated slowdown in economic growth this year.
He also anticipates a modest increase in the current account deficit this year, though Türkiye is poised to benefit significantly from declining oil prices.
"Türkiye is one of the countries that will be most positively affected by the fall in oil prices and natural gas prices," said Şimşek.
Oil prices fell more than 3% on Monday, extending losses from the previous week, on growing concerns that a global trade war could slow the world economy and weaken demand, following China's retaliation against Trump's tariffs.
Şimşek reassured that Türkiye's foreign exchange reserve position meets the International Monetary Fund (IMF) adequacy criteria.
He also cited a drop in the country's credit default swap (CDS) risk premium from 700 to 350 basis points. The cost of insuring Türkiye debt against default widened after Imamoğlu's detention.
"Take a look at the recent protectionist measures announced by the United States; similar countries have seen greater increases compared to Türkiye," said Şimşek.
Türkiye is subject to a 10% U.S. tariff, lower than many other countries, prompting government officials to point out the potential benefits of being a relatively cheaper source of goods.
Şimşek said Türkiye is less vulnerable to protectionist trade policies, citing that 62% of the country's exports are directed to rule-based partner countries and a significant portion to friendly neighboring regions.
