Türkiye is ‘open to business and dialogue,’ says finance minister

BERLIN

The diversification of supply chains after the pandemic has benefited Türkiye, and the country now has “a comprehensive reform program that will help boost competitiveness, productivity, and potential growth,” Turkish Treasury and Finance Minister Mehmet Simsek said on Wednesday.

“We are open for business, and we are open to dialogue,” Simsek stated at the Berlin Global Dialogue (BGD) 2024, where this year’s theme was “building common ground.”

Simsek noted that Türkiye is located in a challenging region, with the Russia-Ukraine war significantly impacting inflation dynamics. While the country has overcome several macroeconomic challenges, other issues, such as inflation, “require more time to address.”

Türkiye was facing a large current account deficit, the minister explained, though this figure has decreased. The budget deficit, excluding earthquake expenditures, has also fallen to 1.6% of gross domestic product (GDP) after being brought under control.

Simsek highlighted that inflation in Türkiye is expected to “fall to single digits” by the end of 2026, following the global experiences of other countries combating inflation. He credited the economic administration’s tight monetary policy and fiscal discipline with anchoring these expectations.

Citing a study by the International Monetary Fund (IMF), which found that trade fragmentation in the global economy could reduce GDP by up to 7%, the minister said the impact would be “equivalent” to the GDPs of Germany and France.

Simsek emphasized Türkiye’s resilience to trade fragmentation, pointing to the country’s full Customs Union with the EU.

“The Customs Union we have with the EU ensures we trade with them based on rules. So, in a sense, we are friends. As far as friendshoring with the EU is concerned, the Customs Union makes the EU our friend. With our neighbors, whether in Central Asia, the Balkans, North Africa, or the Middle East, we consider them friends,” he said.

“That is key. Regarding nearshoring, we’ve benefited post-pandemic from the diversification of supply chains. Geographically, Türkiye looks like the center of the Earth: we are close to Europe and a fast-developing immediate neighborhood. And, of course, we have highly competitive demographics and a skilled workforce,” he added.

Simsek also noted that Türkiye has attracted $70 billion in foreign direct investments (FDI) over the past two decades, despite the ups and downs the country has faced—highlighting the long-term benefits of friendshoring.

Türkiye ‘would like to re-engage with European friends’

Simsek stressed that Türkiye does not “suffer” from high debt levels. He explained that the global debt ratio—including private sector, household, corporate, and government debt—stands at “about 330% of GDP.” In contrast, “for emerging markets, it’s roughly 250%, and in Türkiye, it’s about 99%.”

“On that basis, we have a strong advantage. I think what’s holding global growth back is not just a lack of productivity, but also trade fragmentation, high debt levels, and unfavorable demographics—except maybe in Africa,” he said.

Simsek pointed out that Türkiye is a “sizable economy” with a national income of “$1.3 trillion,” and that the real GDP growth rate has averaged “about 5.5%” over the last two decades. He emphasized that the ministry’s efforts to make Türkiye more resilient to economic shocks are ongoing.

“We have a comprehensive reform program that will help boost competitiveness, productivity, and potential growth. We are open for business, we are open to dialogue, and of course, we would like to re-engage not only with our region but also with our European friends,” the minister added.

• Berlin Global Dialogue
• Finance Minister Mehmet Simsek
• Gross domestic product
• sizable economy
• Turkiye