Proactive steps taken by the government have helped contain the economic fallout of the ongoing conflict in the region, Treasury and Finance Minister Mehmet Şimşek has said.
Speaking on private broadcaster Akit TV on March 16, Şimşek explained that immediately after the conflict began, the Financial Stability Committee convened to conduct scenario analyses with relevant institutions and to determine which measures were necessary.
He emphasized that these actions allowed Türkiye to limit the war’s impact on domestic markets.
Şimşek noted that even countries with no direct connection to the region, such as Indonesia, South Korea and South Africa, experienced sharp declines in their stock markets, with losses of 10 percent or more since the outbreak of the war. By contrast, Türkiye’s markets saw a more contained drop of 5.5 percent, he said.
Şimşek acknowledged, however, that despite the measures, uncertainty created by the conflict has pushed up bond yields and risk premiums in secondary markets. “The reason is clear: We are part of this region, and it is impossible to remain unaffected by developments here,” he said.
Highlighting Türkiye’s economic ties with the region, Şimşek pointed out that exports to countries, including Iran, amount to roughly $30 billion, while imports stand at about $19 billion. Around 10 million tourists arrive from the region annually, generating close to $10 billion in revenue, Şimşek said.
He warned that the closure of the Strait of Hormuz and disruptions to global energy and commodity trade would inevitably have some impact on Türkiye.
Still, he stressed that the shock has so far been managed effectively. He cited measures taken by the Central Bank to manage foreign exchange and lira liquidity, as well as steps by the Capital Markets Board to curb speculative activity, including a temporary ban on short selling. Borsa Istanbul also introduced additional safeguards, the minister said.
Şimşek reiterated that the government’s economic program aims to bring inflation down permanently, ideally below 20 percent.
He cautioned that the current oil shock poses a risk of temporarily derailing the disinflation path, but expressed confidence in the program’s resilience.
He recalled that last year the program proved its strength despite domestic challenges, trade tensions, agricultural frost and drought, with inflation continuing to decline.
“The war is now a major source of uncertainty. We are facing a significant external shock with potential effects on the current account, inflation, growth and the budget. Still, I speak with the assumption that this shock will be temporary,” he said.
Şimşek concluded by noting that inflation is expected to continue falling this year, though it remains too early to say whether the decline will reach the government’s targeted level.
