The disbandment of the PKK terrorist group and up to date developments in Syria, together with the lifting of U.S. sanctions, are going to be “huge” when it comes to geopolitics, being “a source of leverage to help Türkiye move up,” Treasury and Finance Minister Mehmet Şimşek mentioned on Tuesday.
Şimşek was in Qatar’s capital, Doha, talking throughout a panel on the Qatar Economic Forum.
During the session, when reminded of U.S. President Donald Trump’s announcement that they might carry sanctions on Syria, Şimşek mentioned that “the peace dividend is likely to be massive.”
“First of all, having a stable, peaceful and prospering Syria on its own is a huge gain for the region and of course for Türkiye,” he mentioned, citing a 911-kilometer (566.07-mile) border with Syria.
“Clearly, that is going to help in a big way, because conflict drags you down, (and) as we address the conflıcts, as we rebuild, you know functions (of) state, it’s a huge boost for the entire region,” he mentioned.
“So that has been a welcome move,” he added.
But going again on the PKK, he mentioned it waged an almost 50-year battle towards Türkiye, recalling that final week “they agreed to disband and disarm,” including that “this is also huge.”
“Because, according to a study, including the opportunity cost, we have wasted almost $1.8 trillion over the past five decades combating terror,” he mentioned.
Now he mentioned, the peace dividend can be large when it comes to channeling sources to extra productive areas for improvement and progress.
“In that sense, these two developments are going to be huge in terms of geopolitics no longer being a drag but actually being a source of leverage to help Türkiye move up,” mentioned Şimşek.
Economic program ‘intact’
Answering a query on attracting long-term curiosity of traders, the minister touched upon the three-year financial program that the federal government has put in place, suggesting it’s “on track,” “is intact” and “is delivering.”
Şimşek cautioned towards inflation, which he mentioned “is high” however at a 40-month low, noting additionally “there has been a recovery” over the previous two weeks in impact reserves.
Annual inflation slowed to 37.9% in April, the bottom stage since December 2021, based on official knowledge.
“Investors are actually back, interest rates are coming down, CDS (the risk premium) has fallen significantly by well over or close to 90 basis points,” he defined.
Moreover, he mentioned there was “a recovery” within the traders’ sentiment, in the event you take a look at the previous couple of weeks, which he mentioned is mirrored in monetary market situations.
The Turkish lira depreciated and belongings had been impacted following the arrest of Istanbul Mayor Ekrem Imamoğlu earlier this 12 months and uncertainty about U.S. tariffs. Imamoğlu was jailed in late March on corruption expenses pending trial. That despatched the lira and Turkish belongings sharply decrease earlier than authorities acted to stabilize the markets.
The restoration was notably seen prior to now two weeks because the reserves of the Turkish central financial institution turned to extend once more, whereas the exit from the FX-protected scheme continued, and the lira remained round 38 towards the U.S. greenback.
The minister additionally mentioned that international direct funding (FDI) has additionally picked up over the previous 12 months, including that Türkiye is a really giant financial system “with a pretty decent infrastructure and huge pool of talented people and significant regional integration.”
“So, I think when the dust settles, they (investors) will be looking at countries that are resilient to global trade fragmentation, they will be looking at countries that will benefit from stability and prosperity in the region. I think Türkiye remains the top candidate in terms of FDI inflows,” he mentioned.
Moreover, associated to financial coverage and potential future strikes, Şimşek reiterated that “all is set for disinflation,” cautioning, nonetheless, that “no treatment is without side effects.”
“So, we are aware of some dislocations in certain sectors, and that’s why, early this year, we extended support to some of the labor-intensive export sectors, so we are looking at specific remedies while keeping the program on track,” he famous.
“But, the essence of the program is to bring inflation down so that we can set the stage for sustainable high growth.”
He advised that “temporary pain” is “worth taking, going through,” additionally including that they proceed to search for short-term fixes to handle some uncomfortable side effects.
Answering a query on potential help for households, the minister mentioned that final 12 months, near one million new jobs had been added, addressing, nonetheless, that manufacturing is “struggling,” however attributing it to the near recession situations of the eurozone financial system and international development, which he mentioned is dismal.
“Our main trading partners are not doing that well. So understandably, the manufacturing sector is struggling. That’s understandable. But manufacturing accounts for only 23% of our GDP, so the rest of the economy, in particular the services, are doing well, continue to create jobs,” he mentioned.
He additionally mentioned that the households’ debt-to-GDP ratio is lower than 10%, including that whereas short-term pressures are there – the secret is to “sustain” this system, ship on inflation and consequently lay the muse for sturdy, sustainable long-term prosperity.
Source: www.dailysabah.com