If shocks persist, alternative set of policy tools may be considered: Şimşek

ISTANBUL

Finance Minister Mehmet Şimşek stated that the supply-side shock caused by the Iran war is the largest since World War II, warning that normalization of supply chains could take months.

In an interview jointly broadcast by Habertürk-Bloomberg HT on April 9, he emphasized that “If the shocks last longer, we will assess the situation with a separate set of tools.”

Şimşek stressed the importance of safeguarding gains from the current economic program, recalling that last year the program proved resilient against shocks and demonstrated Türkiye’s strong capacity to manage crises.

The minister highlighted that immediately after the outbreak of the war, he convened the Financial Stability Board to determine necessary actions. Despite Türkiye being a petroleum importer and geographically close to the conflict zone, he underlined that the country has performed better than many emerging economies.

He pointed out that precautionary steps were taken across institutions: “We took measures in Borsa Istanbul, the Capital Markets Board acted, the Central Bank acted, and if necessary, we will use other tools. We operate according to [different] scenarios.”

On reserves, he noted: “We have about $162 billion in reserves. We are stronger than in the past in terms of reserve adequacy. There is no problem with reserves; they are solid. Excluding swaps, net reserves are also positive.”

Regarding inflation, Şimşek acknowledged some deterioration in expectations but maintained confidence in the target range. He cited housing supply easing rental inflation, rule-based measures lowering education inflation, and stable prices in core goods. Most importantly, he expressed optimism that food shocks would not occur, allowing Türkiye to maintain its inflation expectation just below 20 percent.