Even in a year of major shocks, inflation is expected to continue falling, and to end the year in the mid-twenties, says Finance Minister Mehmet Şimşek, adding that “our commitment to the disinflation program is firm.”
In a social media post on June 4, Şimşek said he addressed investors at “Türkiye’s New Route to Financial Stability” at the Nomura Investment Forum Asia 2026 via video conference.
“We live in a shock-prone world and a tough neighborhood. Shocks may slow the pace of the program’s delivery, but they are unlikely to change the direction of travel,” Şimşek wrote.
Türkiye’s annual inflation rate rose to 32.37 percent in April from 30.87 percent, with consumer prices advancing 4.18 percent month-on-month.
He also noted that over the past 23 years, Türkiye’s average budget deficit has been 2.6 percent of GDP.
“We reduced the deficit from 5.1 percent in 2023 to 2.9 percent in 2025 through spending controls, the fight against informality, stronger tax compliance, and improvements in audit and revenue collection,” the minister said.
“Even after deploying fiscal space to cushion higher oil prices through the sliding-scale mechanism, we remain on track to meet our 2026 target and to keep the deficit below 3 percent of GDP over the medium term,” Şimşek added.
Şimşek reiterated that they do not have any specific exchange rate targets, stressing that confidence in the [Turkish] lira has strengthened significantly since the program began.
This reflects a tight monetary stance, effective macroprudential measures and an FX reserve position that is fundamentally stronger than in previous episodes of volatility, according to the minister.
High energy prices are likely to widen the current account deficit, but the impact remains manageable, Şimşek also said, adding that softening domestic demand and resilient exports are likely to limit the fallout from the war.
“Exports are supported by supply-chain reconfiguration, the EUR/USD parity and higher value-added production. We expect the current account deficit to be around 3 percent of GDP, below its long-term average,” he furthered.
Şimşek said to attract FDI, talent and capital, “We have introduced a comprehensive framework.”
“It includes: Halving the corporate tax rate for manufacturers to 12.5 percent. A full tax exemption on services exports, including software, video gaming, medical tourism, education, engineering and design. Zero corporate tax on transit trade. A new regional headquarters regime for multinationals, offering a 20 year of corporate tax exemption and no income tax on salaries up to four to six times the minimum wage,” he elaborated.
