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Can Turkey’s economic czar stick to belt-tightening after election loss?

The Turkish government hopes that its remaining four-year mandate will give it time to placate popular anger before the next polls.
Turkish Treasury and Finance Minister Mehmet Simsek looks on before the press conference following the cabinet meeting held at the Presidential Complex in Ankara on August 21, 2023. (Photo by Adem ALTAN / AFP) (Photo by ADEM ALTAN/AFP via Getty Images)
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ISTANBUL — Turkish President Recep Tayyip Erdogan and economy czar Mehmet Simsek vowed earlier this month to continue efforts to tackle sticky inflation despite the risk of stoking popular ire with Ankara’s economic management, a key factor behind the big disappointment — or rather debacle, according to many — that the ruling party suffered in last month’s local polls against the country's main opposition party.

Simsek was named treasury and finance minister after Erdogan’s reelection in May 2023, and was tasked with fixing the economic woes that Erdogan’s unorthodox low-rate policy had spawned, chief among them runaway inflation. But with the March 31 local polls on the calendar at that time, monetary tightening policies to rein in prices remained constricted and election-oriented populist moves continued, leading consumer inflation to hit 68.5% last month.

Barring early polls, Turkey’s next presidential and parliamentary elections are now four years away, and focusing on inflation appears high on Erdogan’s agenda. “We will stay clear [of] populist policies that would exact a price on our country, nation and future generations. The [positive] results of our economic program, especially in terms of inflation, will begin to be seen in the second half of the year,” he said in the early hours of April 1, after results of the previous day's polls emerged.

Simsek, too, was quick to pledge commitment to fighting inflation, in a message that foreign market actors in particular were eager to hear. “To achieve our main goal of reducing inflation lastingly to single digits, we will control public sector expenditure and prioritize saving, in addition to tight monetary, selective credit and income policies,” he said. 

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