RIYADH
Underlining that good infrastructure is key for development and trade, the Turkish treasury and finance minister said his country is investing heavily in infrastructure to enhance connectivity.
Speaking at a session of the Islamic Development Bank (IsDB) Group’s annual meeting and golden jubilee event in the Saudi capital Riyadh on Monday, Mehmet Simsek said Qatar, the United Arab Emirates, Türkiye, and Iraq have signed a deal on the Development Road project.
Through the road project, “we are going to connect Basra Port to highways and railways, all the way to London,” he added.
“Why start from Basra? Because I think one of the links of one of the possible connectivity that was missing was from Basra to Türkiye and to Europe,” he stressed.
Mentioning the difficulties in Syria and other parts in the region, he said: “So you couldn’t consider another alternative. And it seems like it was a perfect match, because we already have connectivity through Georgia, Azerbaijan all the way to Central Asia; there is a rail link.”
He underlined that trade is the engine for the global growth and also Türkiye’s growth.
Mentioning trade fragmentation or protectionism, he said these are significant headwinds.
“Türkiye has an advantage, because with fragmentation, friend-shoring and near-shoring are becoming new trends,” he noted, adding that Türkiye is probably one of the biggest beneficiaries of these new tracks.
Highlighting that Türkiye is friends with the EU, which is one of the largest mature economies as a bloc, Simsek said the country has also very strong historic culture trade ties with the Middle East and North Africa and similarly it is friends with Central Asia.
“So, when you look at our immediate neighborhoods, which account for over 70% of Türkiye’s exports, our immediate neighborhood qualifies as friend and near,” he explained.
“We think we would benefit from trade fragmentation, which is not desirable of course,” he added.
Inflation
Mentioning Türkiye’s inflation agenda, he said, to support disinflation, Türkiye put forth a credible fiscal framework.
“Last year we front-loaded fiscal adjustment, so despite the earthquake, our fiscal position is improving,” he said, adding that the country’s debt to GDP ratio is about 29.5%, which is less than half of global emerging market average.
So, restoring fiscal health, fiscal consolidation, fiscal discipline are also the key components of this program, he said.
Türkiye has also a very comprehensive structural reform agenda, because monetary policy and fiscal policy may help it achieve desired results, he expressed.
“Our structural reform program is aimed at boosting productivity, enhancing competitiveness and therefore improving potential growth,” he underlined.
“We are at the early stages of this program, but it is working and I think next year this time, we should be in a position to talk about results,” he added.
Islamic Development Bank support
Stating that Türkiye is grateful for Islamic Development Bank support, he said the parties have just released a new country engagement framework, which includes financing up to $6.3 billion over the next three years.
“So we’re looking forward to strengthening deepening, broadening our partnership” with the bank, he said.
He also said the bank is a great success story, with 50 years of great service, helping reduce poverty, improve infrastructure, and development of member states.
Türkiye received about $12.9 billion of financing from the bank so far, he said.
“The Islamic Development Bank has been a great partner, it has helped to the Turkish economy become more resilient,” he added.
Growing tourism
He said tourism is a major sector for Türkiye, and last year Türkiye was the fourth-largest tourism destination in the world, after France, Spain, and the US.
Türkiye’s tourism journey began in 1980s but during the last two decades tourism accelerated in the country, he said.
The cities of Istanbul and Antalya were among world’s top 10 tourism destinations, he added.
According to Simsek, Türkiye and Saudi Arabia can cooperate in the tourism sector because their seasons do not overlap.
“We have great human resources, entrepreneurs, and development capabilities. I know the Kingdom of Saudi Arabia has very ambitious tourism targets.
“So why do not we support each other? We bring you tourists, help you develop the resorts, help you manage resources because our seasons are different, we can also provide human resource during your high season,” he noted.
Limited impact of conflicts
On the Ukraine and Gaza issues, he said so far, the impact of conflicts on the Turkish economy has been relatively limited.
The Russia-Ukraine war clearly had a big impact on energy prices initially, and that created a bigger hole in the trade gap, he said, adding that it was temporary.
“When it comes to the human tragedy in Gaza, the impact so far has been negligible,” he said, adding that the reason is Türkiye has a strong program and the Turkish economy is highly diversified.
Usually, the impact comes in the form of risk premium, but because there was no escalation, the risk premium was contained, he stressed.
As long as there is no escalation in the conflicts, the current ongoing conflicts will likely have negligible impact on the Turkish economy or Turkish program, he added.
