Turkey will have to dramatically change its economic policy in order to bring down rampant inflation, according to the country’s newly appointed finance minister, Mehmet Şimşek.
“Turkey has no choice but to return to rational ground” in its handling of the economy, Şimşek told a press conference on Sunday, following his appointment to President Recep Tayyip Erdoğan’s new cabinet the day before.
“Price stability will be our main target,” Şimşek added. “Reducing inflation to single digits in the medium term is of vital importance for our country.”
The country has seen its consumer prices skyrocket over the past two years, with inflation hitting an official 24-year high of 85.5 percent in October. Independent analysts claim the real figures have been far higher, and the cost of basic goods became a contentious political issue in last weekend’s presidential election run-off.
Having won an unprecedented third term in office, Erdoğan tapped Şimşek as treasury and finance minister on Saturday as part of a shake-up of his top team. The appointment of the former Merrill Lynch economist, who helped oversee Turkey’s recovery from the 2008 global financial crisis, has been seen as a signal that Ankara could return to a more conventional economic policy.
Erdoğan has previously refused calls to raise interest rates to fight inflation, deeming it un-Islamic.
“Şimşek will be treading a very fine line,” said Aura Sabadus, a researcher at the Center for European Policy Analysis.
“His appointment is good news for markets, but it’s worth remembering Erdoğan has already fired two deputy central bank governors who opposed his unorthodox views on the economy,” Sabadus said.
Those competing visions could spell more trouble ahead, said Karabekir Akkoyunlu, a lecturer at London’s School of Oriental and African Studies.
“Şimşek said Turkey has no choice but to go back to rational grounds, but that begs the question of why it was irrational previously,” he said.
Erdoğan’s big-spending giveaways, like offering households free gas and increases in public sector salaries, could soon give way to efforts to balance the books, Akkoyunlu added. “With the election out of the way, the ‘campaign economy’ is over. Şimşek will press on with austerity.”
