by Burak Akinci
ANKARA, Jan. 15 (Xinhua) -- Türkiye is likely to maintain its tight monetary policies and structural reforms in 2025 following years of economic challenges marked by high inflation and currency volatility, Turkish economists said, expressing cautious optimism about the country's economic outlook.
Speaking to business leaders in Istanbul last week, Treasury and Finance Minister Mehmet Simsek outlined the government's priorities. "Our key objectives this year are to accelerate disinflation to a noticeable level and push forward structural reforms," he said, referring to an economic program introduced in mid-2023 to address runaway inflation that had peaked at 85 percent in October 2022.
In mid-2023, the Turkish government shifted away from its unconventional policy of keeping interest rates artificially low despite surging inflation, adopting a more stringent monetary policy that has since helped reduce inflation.
As of December 2024, the country's annual inflation rate had moderated to about 44 percent, its lowest level in 18 months, down from around 75 percent in May 2023. However, this figure still remains well above the levels seen in other major economies.
"Disinflation has begun," Simsek noted. "We anticipate achieving single-digit inflation by 2026."
Senol Babuscu, a finance professor at Baskent University in Ankara, predicts further inflation decline due to monetary tightening. However, he expects the rate to exceed the central bank's 21 percent year-end target for 2025, settling around 30 percent.
Can Selcuki, who heads Istanbul-based Economics Research, shares this assessment. "Disinflation will continue in 2025, but annual inflation will likely close the year around 30 percent," he said, emphasizing that fiscal measures, including public spending cuts and tax reforms, are crucial to reinforce monetary policy.
While analysts anticipate a temporary inflation spike in January due to a 30 percent minimum wage increase announced in December 2024, a more pressing concern remains the persistent cost-of-living crisis affecting Turkish households, particularly through rising rental costs.
To address the issue, the government has announced plans for 250,000 affordable housing units to be built across various cities beginning mid-2025, under the supervision of the state housing agency TOKI.
Despite domestic challenges, some see potential for increased foreign investment. Engin Aksoy, president of the Turkish International Investors Association, forecasts 13.5 billion U.S. dollars in foreign investment over the next six months, primarily in green and digital transformation projects.
International financial institutions maintain cautious optimism. ING Bank projects inflation will fall below 30 percent by the end of 2025, though this remains well above the central bank's target.
As Türkiye implements policies to curb inflation and stimulate growth, the coming years will test its ability to navigate economic challenges, the Dutch banking group added.
留言 0