Turkish treasury and finance minister expressed on Thursday the likelihood of a conclusion to the monetary tightening cycle, a development that holds favorable implications for the global economy.
Mehmet Şimşek, speaking at the general assembly of the Banks Association of Türkiye, noted an increased possibility of monetary easing starting from the half of 2024.
He remarked on the recent frequent increases in interest rates by central banks, highlighting the anticipation of more accommodating financial conditions in the latter half of the upcoming year.
Stating that central banks increased interest rates dozens of times recently, he said financial conditions will be more supportive in the second half of the next year.
The global economy is expected to grow by 40% during the coming five years, Şimşek added, noting this rate is below the global potential.
Meanwhile, Türkiye’s growth performance is robust, he said.
Growth forecast stands at 4.5%
“In 2023, we are forecasting a growth rate of around 4.5% despite all global financial problems,” he said.
Türkiye is also facing some economic problems, including current account deficit and inflation, and the economy should be rebalanced, he said
“As I said before, our main principles are transparency, consistency, predictability and complying with international norms,” he said.
The Turkish government is shaping policies within these main principles, he said.
“We will move forward in a system that embraces the principles of freedom of enterprise, free exchange, floating exchange rate, open and rule-based economy.
“The reduced political uncertainty following the elections and the steps we have taken in monetary and fiscal policy have started to have a positive impact on expectations for the Turkish economy.
“Türkiye’s risk premium has declined from 700 basis points to around 400 basis points,” he said.
Optimistic outlook for Turkish economy
He further said international credit rating agencies have revealed a more optimistic outlook for the Turkish economy, adding one of the agencies raised the Turkish banking system’s outlook to stable from negative.
“Funds started to flow into our capital markets, all these developments have eased access to foreign financing opportunities and reduced financing costs,” he added.
Touching on the Turkish banking sector, he said the sector has proved its resilience during the global financial crisis and the pandemic.
The Turkish banking sector is an important element of the country’s economy, he said.
By Breaking News Turkey with AA