International
Turkey could confront a growth trade-off in its battle against inflation, says Finance Minister.
Turkey's Finance Minister, Mehmet Simsek, acknowledged the potential for trade-offs as he navigates the delicate balance between curbing inflation and sustaining economic growth, all under the scrutiny of President Recep Tayyip Erdogan.
In addressing concerns about whether Erdogan would accept a period of economic slowdown or worse in exchange for controlling price hikes, Simsek asserted that such trade-offs are acceptable. He expressed his belief that there would be a degree of tolerance for a moderation in domestic demand, indicating a shift in the growth trajectory and its composition.
Turkey's recent economic vigor has largely relied on robust consumption fueled by accessible credit, yet this approach has also contributed to an inflation crisis and currency devaluation. Simsek, formerly with Merrill Lynch, was enlisted by Erdogan a year prior to overhaul this unconventional monetary strategy and attract greater foreign investment.
Significant strides have been made, notably through substantial interest rate hikes, with assurances from the central bank governor of further measures if necessary. However, inflation persists as the primary challenge, with projections indicating a peak above 70% this month.