Türkiye has strengthened the foundations of its economy with the stability and reform program that the government has been implementing for last two years, President Recep Tayyip Erdoğan said on Friday, lauding the drop in inflation and suggesting the government has what it takes to “safely bring the ship to the port in stormy waters.”
Speaking at the 28th ordinary general assembly of the Independent Industrialists and Businessmen’s Association (MÜSIAD), Erdoğan said that the world is going through a period of “painful and historical changes,” touching upon the risks and uncertainty stemming from customs tariffs.
Recalling the period of the COVID-19 pandemic and the lasting impacts it left on the global economy, he pointed out that protectionist policies in trade are getting stronger.
“The resistance of inflation, which reached the peaks of the last 60-70 years during the pandemic, has not yet been broken. Fear of inflation has become the main determining factor of economic policies in many countries of the world, including developed economies,” he said.
“It is clear that the atmosphere of uncertainty will continue for a while, with the negative impact of the clashes that flared up over customs tariffs. Risks and threats are increasing not only in the economy, but also in a wide range from international relations to politics and social movements. We see that the global economy is trying to move forward in a stormy sea,” the president said.
He suggested it would take “a little more” for “the stones to fall into place and the waters to calm down,” while suggesting that they were making their projections accordingly.
“As a government, we have the plan, program, experience and will to safely bring the ship to the port in stormy waters. We proceed calmly and patiently, regardless of the crises that erupt every day. We implement our decisions by calculating the pros and cons on a highly rational basis,” Erdoğan said.
‘Foundation strengthened’
Furthermore, he said the foundation of the Turkish economy got strengthened with the stability and reform program, referring to a shift to more conventional policies following the 2023 elections.
“We reduced our external fragility, we increased our resistance to shocks and ensured macro financial stability. Thus, we created a solid foundation for permanent and sustainable growth,” Erdoğan said.
“One of the most important goals of the program is to save our citizens from the trouble of the high cost of living,” he added.
He also said “significant progress” has been made in the last two years on the way to this goal.
“Annual inflation has been falling uninterruptedly for 11 months. In April, we reached the lowest level in the last 40 months. Hopefully, more will come,” Erdoğan said.
The inflation in Türkiye dropped to 37.9% in April, down from 38.1% in March, figures from the Turkish Statistical Institute (TurkStat) showed earlier this week. Annual inflation exceeded 75% in May 2024, before starting to slow in June amid aggressive monetary tightening.
The central bank began to gradually cut its benchmark interest rate in December and lowered it to 42.5% in early March.
But it reversed the cycle last month with a surprise 350-basis-point rate hike to 46%, which boosted Turkish assets and signaled renewed commitment to tackling inflation.
“We are not compromising on our other priority, financial discipline. While rapidly healing the wounds of the earthquake, we continue the spending discipline and savings measures we initiated last year with the same determination this year,” Erdoğan also said.
At the same time, he referred to the current account deficit, suggesting it is decreasing steadily and there was a surplus when gold is excluded.
Oil prices, employment
“The decline in oil prices is working in our favor. It is reducing both inflation and the external deficit,” the president said.
Turkish officials had earlier said that recent developments in the oil market and the lower “baseline” tariff of 10% imposed by the U.S. administration could be advantageous for Ankara.
“We are also at historic levels in employment. Our unemployment rate fell to 7.9% in March. This rate is 6.5% for men. It is 10.6% for women. These figures indicate the lowest level in the last 20 years,” he added.
Erdoğan, however, said there may be “temporary slowdowns” in domestic and foreign demand depending on developments.
“These are quite natural. We neither ignore these nor get hung up on them. We continue on our path with a sustainable and inclusive growth target that goes beyond short-term fluctuations,” said Erdoğan.
“We have successfully passed the test against the fluctuations experienced in the last one and a half months. We have seen once again how resistant the program is to shocks, manipulative attacks and sabotage attempts,” he stated.
“With the decrease in global uncertainties, we will all witness that Türkiye is positively differentiating itself among developing countries.”