Türkiye remains committed to "prudent, responsible and sustainable macroeconomic policies" in the face of ongoing global economic uncertainty, Treasury and Finance Minister Mehmet Şimşek said on Tuesday.
Şimşek's remarks came in the U.S., where he arrived on Monday for a series of high-level engagements, seeking to court rating agencies, investors and companies, and reassure them on the government's commitment to its medium-term economic program.
He said the road map to stabilize the Turkish economy is "on track," while spending discipline will continue even with downside risks to economic growth estimates.
"I can assure you, spending discipline will be maintained," Şimşek told an event hosted by the Atlantic Council on the sidelines of the spring meetings of the International Monetary Fund (IMF) and World Bank.
"Spending controls are there, and we're looking to see if we could cut some non-discretionary spending."
Şimşek said recent global fluctuations carry risks for inflation but added that lower oil prices and tightened monetary policy could help ease pressures.
"Inflation is likely to stay well within the program target band," he stressed.
"Our response to global economic policy uncertainty is to stick to our prudent, responsible, sustainable macroeconomic policies," he added.
The medium-term program, implemented since mid-2023, centers around tight monetary policy, mainly aimed at curbing stubborn inflation.
Annual inflation 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. The central bank's year-end inflation estimate currently stands at 24%.
Last Friday, Türkiye's overnight interest rate rose to the new upper band of the rate corridor, around 49%, a day after the central bank's surprise policy tightening.
The bank delivered a 350 basis-point interest rate hike to 46%, reversing a short-lived easing cycle and signalling renewed commitment to tackling inflation.
Those moves followed a market turmoil following the March arrest of Istanbul Mayor Ekrem Imamoğlu and the imposition of tariffs by Trump.
Despite global trade uncertainties, Şimşek said that Türkiye's financial conditions are helping to sustain domestic demand and reduce imports.
"With oil prices significantly lower, it implies that the actually current account deficit is likely to be lower than our program target," he said.
He added that structural transformation was a key priority going forward, with a focus on digital infrastructure, artificial intelligence and green transformation to help reduce Türkiye's dependency on oil and gas imports.
Commenting on global trade dynamics, Şimşek said a fragmentation of global trade would be harmful to all parties, including Türkiye. Still, he noted several factors that make the Turkish economy resilient.
"We rely mainly on domestic demand, investments and consumption within Türkiye for growth. So we're not as open as many of our competitors," he said.
"If you look at our overall exports, over 80% is with countries that either we have free trade agreements with or that are in the immediate neighborhood."
Şimşek added that Türkiye's strong manufacturing base and its deepening integration into global value chains enhance its strategic importance.
"I think Türkiye is one of the very few countries out there with a sizable manufacturing culture and capacity where we could see Türkiye's integration in global value chains, when it comes to the West in general, be strengthened," he said.
"So Türkiye will be in a good position to attract Western investments. Also, some Asian players may want to have some base in Türkiye to cater for the needs of some of these markets.”
Şimşek stressed that Türkiye remains an attractive destination for investors from a long-term perspective, citing its strong infrastructure, skilled labor force and leadership in artificial intelligence readiness among emerging markets.
"If you're taking a long-term perspective, Türkiye, in my view, is still a compelling case, despite some issues that occasionally emerge," he said.
The minister emphasized Türkiye's potential to contribute to the European Union's defense needs, noting that the bloc plans to spend 800 billion euros ($912 billion) on defense over the next four years. He said Türkiye has the capacity to help meet this demand.
On relations with the World Bank, Şimşek said the bank's financial commitments to Türkiye have risen from $17 billion to $35 billion over the past three years.
"The World Bank's focus and our priorities perfectly match. We're talking about, for example, the green transition. They're there for us. Productive infrastructure, they're there for us. Digital infrastructure, they're there for us," he said.
