The Turkish Finance Minister, Muhammad Shimashk, considered that his country may be one of the few countries in emerging markets that can benefit from the customs storm launched by US President Donald Trump, stressing that the decrease in oil prices and the flexibility of commercial relations give the Turkish economy a space for maneuver.
In an interview with the Financial Times published on Tuesday, Shimashk said: “When dust is cleansed, we hope and believe that Türkiye can excel positively in the eyes of investors compared to other emerging economies.”
Limited exports to America
Although Trump imposed a 10% basic customs tariff on Turkish imports, Shimashk indicated that the Turkish economy of $ 1.3 trillion is not among the most affected, explaining that 80% of Turkey’s foreign trade is carried out with countries with free trade agreements, such as the European Union and neighboring countries in the Middle East, Central Asia and North Africa.
The data shows that the volume of bilateral trade between Turkey and the United States last year amounted to about 32 billion dollars, equivalent to only 5% of the total trade of Turkish goods, with Türkiye achieved a surplus of $ 1.5 billion.
Stability program faces its most difficult test
The Economic Reform Program, which Shimchk launched 18 months ago, was exposed to a severe test last month, after the arrest of the opposition mayor Akram Imamoglu, prompting Turkish financial markets to decline sharply, and forced the central bank to raise interest rates and pump billions of dollars to protect the lira.
“There was a strong shock, but temporary due to political turmoil, but now the source is customs duties,” Shimeck said.
Despite the stability of the lira since then, the central bank was forced to keep the interest rate at 42.5%, while inflation rates fell to 38.1% in March after reaching its peak at 75% last May.
Barclays Bank analysts said in a memo that the central bank is now benefiting from “the decline in the dollar in the local market and the return of non -resident flows, after the strong pressure that the reserves were exposed to in the first three days after the arrest.”
Budget deficit and public debt under control
Shimashk admitted that the slowdown in economic growth may lead to a decrease in tax revenues, which could expand the budget deficit to exceeding expectations, which indicated a decrease in deficit from 4.9% of GDP in 2024 to 3.1% this year.
The minister said: “We will maintain the discipline of spending regardless of that … The basic idea of keeping the deficit small is to support the central bank in curbing inflation, not to reduce the rise in public debt,” noting that the percentage of debt is still at acceptable levels of up to 25% of the gross domestic product.
Muhammad Shimkek is seen as the cornerstone of Türkiye’s efforts to return to traditional economic policies after years of relying on credit facilities that led to excessive inflation and crisis in the balance of payments.
Tim Ash, a strategic expert in the management of assets at “RBC Blaway”, wrote: “As long as your chills remain on his position, I think the markets will maintain relative stability despite political turmoil,” wrote Tim Ash, a strategic expert in asset management at RBC Blaway.
While Shimikk refused to comment on the political situation, he concluded: “I am completely supportive of the rule of law, achieve prices, and enhance the ability to predict, and improve the investment climate … These are valuable contact matters.”
