Permanent Recovery in the Turkish Economy, Winds of Change on Inflation and Tax Policies

A New Era in Economic Challenges, Turkey’s Progress in Fighting Inflation

Minister of Treasury and Finance Mehmet Şimşek made important statements about Turkey’s economic agenda in the television program he attended. Minister Şimşek stated that the difficulties in the fight against inflation were behind him and that their goal was to reduce inflation to single-digit figures again. He emphasized that with the steps taken and regulations made in the Turkish economy, a relief period would begin in the second half of 2025.

Minister Şimşek stated that they prioritized fighting against inflation in order to ensure economic stability. He expressed that they managed the vulnerabilities of the Turkish economy by especially providing control in critical areas such as exchange rate risk, fluctuations in oil prices and the budget deficit. He stated that they took long-term steps to control inflation and ensure a permanent increase in welfare with the strategies they implemented within this framework.

Transitional Period in Fighting Inflation

Minister Şimşek said that they accepted the first year of the fight against inflation as a transitional period and made it a priority to ensure economic stability. He stated that the effects of the economic policies they implemented would be seen in time and that the most difficult period was behind them. Şimşek drew attention to the difficulties in predicting global factors such as oil prices and stated that they carried out comprehensive studies to manage the effects of these variables on the economy.

Also touching on the complexity of economic models, Minister Şimşek explained that inflation entered an increasing trend due to critical factors such as oil prices and exchange rates, but that the process of reducing inflation had begun thanks to the measures taken. Şimşek stated that these positive developments would be felt more clearly in the second half of 2025 and emphasized that price increases had slowed down and inflation had been brought under control.

Deterioration in Income Distribution and Increase in Welfare

Şimşek stated that one of Turkey’s biggest problems was the deterioration in income distribution and stated that reducing inflation was essential to ensure a permanent increase in welfare. Şimşek reminded that the AK Party government had managed to reduce inflation to single digits in the past and said that this success was achieved in the early 2000s and that their goal was to achieve the same success again. Recalling that the average inflation rate in Turkey was over 70 percent in the 90s, Şimşek drew attention to the difficulty of reducing inflation.

Stating that patience is needed until 2025, Şimşek explained that price increases, especially in the service sector, will decrease more slowly, but great progress will be made in goods inflation. Stating that the service sector will also be relieved with the increase in housing supply, Şimşek said that housing projects will be implemented in many regions, including earthquake zones.

Tax Regulations and VAT Rates

Minister Şimşek made important statements on taxation and stated that they made great efforts to ensure justice in taxation. Stating that they made regulations in corporate tax and some special sector taxes, Şimşek said that they created a fairer tax system by removing tax exemptions especially for companies. Emphasizing that they did not plan to increase VAT rates, Şimşek also clearly stated that a new VAT increase that would directly reflect on the citizen was not on the agenda.

Reminding that VAT and SCT rates have been increased in the last year, Şimşek stated that they focused on making a more equitable arrangement in the taxation system after these steps. Şimşek, who argued that the criticisms made especially on social media were unfair, said that a continuous polarization was created against the government’s economic program, but that the real goals should not be ignored.

Patience and Time for Economic Stability

Minister Şimşek stated that the Turkish economy was built on strong foundations and that the results of the steps taken patiently would be seen in time. Stating that President Recep Tayyip Erdoğan also gave full support to the economic program, Şimşek said that the difficulties experienced in the economy would be overcome and Turkey’s level of welfare would be increased.

Stating that time is needed for the realization of long-term economic goals, Şimşek expressed that he believed in Turkey’s economic potential and that the steps taken would bear fruit in time. Stating that they managed their economic policies in line with long-term goals as the Ministry of Treasury and Finance, Şimşek added that they foresaw a significant relaxation in the economy in the second half of 2025.

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