Erdogan and Simsek’s Economic Reboot: Combating Inflation and Reviving Turkey’s Economy

Turkish President Recep Tayyip Erdogan and economy czar Mehmet Simsek have recently reaffirmed their commitment to addressing stubborn inflation issues, despite potential backlash from the public due to Ankara’s economic policies. The disappointment from last month’s local elections, in which the ruling party faced a major setback against the main opposition party, was largely attributed to economic management issues.

In May 2023, after Erdogan’s reelection, Simsek was appointed treasury and finance minister with the task of resolving the economic challenges caused by Erdogan’s unconventional low-rate policy, most notably high inflation rates. However, leading up to the March 31 local elections, efforts to control inflation were hindered by populist measures and a lack of monetary tightening, resulting in consumer inflation reaching 68.5% last month.

With the next presidential and parliamentary elections in Turkey four years away, Erdogan’s focus has shifted towards combatting inflation. He emphasized the government’s commitment to avoiding populist policies that could harm the country and future generations, expressing optimism that the economic program would yield positive results in the latter half of the year.

Simsek echoed Erdogan’s sentiments by pledging to prioritize efforts to combat inflation, emphasizing the importance of controlling public sector spending and promoting saving. Foreign market actors were eager to hear these commitments as reducing inflation to single digits remains the main goal for the government.