The Turkish economy is going in a precise stage in which indicators of cash improvement intersect with a clear slowdown in the pace of growth.
While inflationary pressures began to show a gradual decline, the government still adheres to a strict monetary policy aimed at stabilizing financial stability and curbing prices.
Ankara is betting on a long -term economic program that balances markets and stimulating productive activity, with an emphasis on continuing to support employment and investment to avoid entering into a comprehensive economic recession.
Government satisfaction
On Monday, the Turkish Statistics Authority announced that the annual inflation rate fell to 37.9% last April, compared to 38.1% last March, to record its lowest level since December 2021.
On the other hand, monthly inflation reached 3%, in continuing price pressure, albeit less than expectations.
These numbers are an indication of the success of the strict monetary policy followed by Ankara since mid -2023. In this context, the Minister of Treasury and Finance, Mohamed Shimashk, stated during a television interview that the economic program is moving in the right direction, expecting that inflation will drop to less than 30% by the end of 2025, especially after the end of the work of the Rent Rock Law in July.
In previous statements last April, Shimakk affirmed that the government will not change its economic approach, stressing that the stability of prices and a permanent decline in inflation represents a top priority.
The minister pointed out that the Turkish lira witnessed a recent decline, but the impact of this on prices remained weak due to the low domestic demand, which helped reduce the transfer of exchange rate fluctuations to inflation, and contributed relatively to controlling prices.
Strong performance for the export sector
The export sector recorded a strong performance, as the Minister of Commerce, Omar Balla, announced that the value of Turkish exports amounted to $ 20.9 billion in April, an increase of 8.5% compared to the same month last year. The total accumulated annual exports increased to $ 265 billion, achieving a new record.
Between official optimism and international reservation
Despite government optimism, international expectations showed remarkable reservation. In its report issued last April, the International Monetary Fund remained its expectations for the growth of the Turkish economy at 2.7% for the current year, compared to Turkish official estimates of 4%.
The Fund expected inflation to about 24% by the end of the year, if the government continues to implement its strict monetary and financial policies.
The data of the Turkish Statistical Institute showed that the economy grew by 3.2% during the year 2024, driven by a quarterly growth of 1.7% in the last quarter of the year, which ended the period of technical recession that witnessed the middle of the same year.
Strict monetary policy and direct intervention
Since mid -2023, the Turkish Central Bank has followed a strict monetary policy with the aim of curbing inflation, which in previous periods exceeded 70%.
In this context, the bank gradually raised the main interest rate from 8.5% to 50% by March 2024, before a gradual reduction cycle started to 42.5% last February.
The bank surprised the financial markets last month with a new lifting of 350 basis points (3.5%), bringing the basic interest rate to 46%, confirming its commitment to decisive action to face inflationary pressures and market fluctuations.
The bank also pumped more than $ 50 billion from its reserves to support the stability of the exchange rate, which contributed to reducing fluctuations and enhancing confidence in economic policy.
Focus on production and manufacturing
In its economic strategy, the Turkish government focuses on supporting technology and manufacturing sectors as major growth engines and job creation, and a way to reduce dependence on imports.
The Minister of Finance, Mohamed Shimashk, stressed on more than one occasion that supporting these sectors will be an essential tool to meet slowdown, noting the intention of the Central Bank and the government “Exim” bank to enhance credit facilities for exporters during the next stage.
Shimashk explained that tightening monetary policy limits the demand for imported goods, which contributes to improving the current account deficit by reducing the value of imports and supporting local production, considering that this trend gives the Turkish economy greater flexibility to confront global fluctuations.
According to the central bank data, the current deficit in February amounted to about $ 4.4 billion, while the total deficit during the first two months of the year amounted to 8.4 billion dollars, to reach 12.8 billion dollars on an annual basis.
Different views on sustainability
In this context, the economic researcher, Haqi Airul John, believes that the apparent improvement in indicators does not necessarily mean that Türkiye has started building a sustainable economic model.
In his interview with Al -Jazeera Net, he explained that what has been achieved so far does not exceed that it is relatively controlling the crisis, and not a transgression of it.
He added that the continuation of relying on monetary policy as a single tool to manage the economy, without accompanying this with real structural reforms, will remain the economy in the circle of short -term response, instead of establishing a solid and sustainable growth.
John pointed out that investments in technology and manufacturing will not achieve a fundamental impact unless they are translated into actual improvement in productivity and added value, warning that the absence of this shift will keep growth rates vulnerable to fragility and fluctuations.
A shift in growth sources
For his part, the Turkish economic analyst, Bilal Baishash, believes that the frequency of growth in Türkiye has been going for a while at a relatively low level, which is reflected in the estimates of international institutions and national expectations alike.
He explained, in his interview with Al -Jazeera Net, that strict monetary policy began to give tangible results, noting that increasing exports and searching for new markets is at the heart of the current economic strategy.
He added that Türkiye is seeking to reshape its economic growth path in a more balanced way, by reducing dependence on domestic demand and stimulating external demand.
He stressed that this gradual shift in the source of growth has become clear, pointing out that the slowdown of domestic demand reflected positively on a number of total indicators, such as the current account deficit and inflation.
However, he warned of an feather of external risks such as commercial wars and geopolitical tensions, stressing the need to manage these risks with flexibility and ongoing vigilance.
