Şimşek sees continued disinflation, low early election risk

LONDON  

Treasury and Finance Minister Mehmet Şimşek told international investors in London that inflation is likely to continue falling albeit at a slower pace, while stressing that political backing for the government’s economic program remains strong and the probability of early elections is very low.

According to the presentation he delivered at the meeting in London and published on the ministry’s website on June 25, annual inflation is projected to slow to 26 percent in 2026.

Şimsek said the Iran war had been a major stress test for the economy, adding, “We stayed the course and that political ownership of the economic program remains strong.”

The current account deficit is rising but remains manageable, supported by higher domestic oil and gas production, the green transition, an expanding services surplus, industrial policy initiatives and investment in competitiveness and resilience, he noted.

Despite slower growth and the revenue impact of the sliding-scale fuel tax mechanism, the budget deficit target of 3.5 percent of GDP in 2026 is well within reach, Şimşek said.

Economic growth is expected to be 3.8 percent in 2026, he added, noting that the short-term moderation reflects global uncertainty and tight financial conditions.

Şimsek outlined a series of structural priorities, including accelerating the green transition, advancing digital transformation, investing in productive infrastructure such as railways and moving industry up the value chain.

On the political outlook, Simsek said the economic program continues to deliver, reducing the risk of policy reversal. He also said that the probability of early elections remains very low.

The disbanding and disarmament of the PKK could generate significant economic benefits, improve regional stability and integration, and help southeastern and eastern Türkiye emerge as new growth engines, Şimşek said.