A top Turkish economy official said Thursday that the government's commitment to the disinflation program remains "firm," suggesting also that inflation is "expected to continue falling" even in a year marked by major shocks.
"Our commitment to the disinflation program is firm. Even in a year of major shocks, inflation is expected to continue falling, and to end the year in the mid-20s," Treasury and Finance Minister Mehmet Şimşek said.
In a post on social media platform X, the minister noted he addressed investors at the Nomura Investment Forum Asia 2026. He also touched upon key messages shared at the Fireside Chat on "Türkiye’s New Route to Financial Stability."
"We live in a shock-prone world and a tough neighbourhood. Shocks may slow the pace of the program’s delivery, but they are unlikely to change the direction of travel," he wrote.
Türkiye, since the middle of 2023, has been pursuing a tighter monetary policy through an economic program aimed at reining in soaring prices and ensuring sustainable growth.
The annual inflation rate in April stood at 32.37%, with a monthly increase of 4.18%, according to official data. May data is due to be released on Friday.
The data in April marked a slowdown in the disinflation trend, following the start of the U.S.-Israel war on Iran, which sent energy prices sharply rising and revived inflationary pressures around the world.
On fiscal performance, Şimşek suggested that the "track record speaks for itself."
"Over the past 23 years, Türkiye’s average budget deficit has been 2.6% of GDP. We reduced the deficit from 5.1% in 2023 to 2.9% in 2025 through spending controls, the fight against informality, stronger tax compliance, and improvements in audit and revenue collection," he noted.
"Even after deploying fiscal space to cushion higher oil prices through the sliding-scale mechanism, we remain on track to meet our 2026 target and to keep the deficit below 3% of GDP over the medium term," he added, referring to the special mechanism introduced amid the Iran war to offset the surge in energy prices.
On the lira, the minister said they "do not target a specific level," explaining that the "confidence in the lira has strengthened significantly since the program began."
"This reflects a tight monetary stance, effective macroprudential measures, and an FX reserve position that is fundamentally stronger than in previous episodes of volatility."
Moreover, reflecting on the current account, Şimşek said that high energy prices "are likely to widen the deficit, but the impact remains manageable."
"Softening domestic demand and resilient exports are likely to limit the fallout from the war," he maintained.
"Exports are supported by supply-chain reconfiguration, the EUR/USD parity, and higher value-added production. We expect the current account deficit to be around 3% of GDP, below its long-term average," he added.
At the same time, Şimşek shared the details of the recently unveiled measures and framework through which Ankara seeks to attract foreign direct investment (FDI), talent, and capital:
- Halving the corporate tax rate for manufacturers to 12.5%.
- A full tax exemption on services exports, including software, video gaming, medical tourism, education, engineering, and design.
- Zero corporate tax on transit trade.
- A new regional headquarters regime for multinationals, offering a 20-year corporate tax exemption and no income tax on salaries up to four to six times the minimum wage.
- The world’s longest non-dom regime, running for 20 years, with foreign-source income untaxed, inheritance tax at 1%, and only Turkish-source earnings taxed.
- A new home for startups: Fully digital company formation, tax-efficient ESOPs, venture capital tools, and a flagship hub at Atatürk Airport-Terminal Istanbul.
- A One-Stop Shop under the Presidential Investment and Finance Office for company formation, permits, tax, land, and incentives.
- An asset repatriation framework allowing cash, gold, and securities to be declared under a clear, FATF-aligned regime with varying tax rates based on asset type and holding period.
