Turkey's economy returns to a 'positive cycle': Finance minister

Turkey's economy has returned to a “positive cycle” after market turbulence in March, Finance Minister Mehmet Simsek said on Sunday.

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All financial indicators including gross foreign exchange reserves and the main stock index BISTIOO have returned to mid-March levels with the steps taken to manage the economy, Simsek said in a live interview with broadcaster Kanal 7.

The detention of Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan’s main political rival, on March 19 triggered market turmoil that prompted an emergency interest rate hike and drained foreign currency reserves.

Turkey's central bank this week cut its benchmark interest rate by a larger-than-expected 300 basis points to 438, resuming an easing cycle that had been disrupted in March.

Credit ratings agency Moody's on Friday upgraded Turkey's rating to “Ba3” from “BI,” citing improving monetary policy credibility, easing inflation and reduced economic imbalances.

Turkey's government expects that inflation will end the year “within the central bank's midpoint to high forecast range. We expect a figure below 29%,” Simsek said.

Turkish annual consumer price inflation slowed to 35% in June, extending its fall from a peak of around 75% in May 2024. The central bank's year-end inflation midpoint estimate currently stands at 24%, in a forecast range of 19% to 29%. Turkish economic growth has remained below forecasts in recent months and there is a “high probability” of a limited deviation from the budget revenue target, Simsek said.