Inflation, current account deficit, and global economic challenges continue to deeply affect the Turkish economy.
Hazine ve Maliye Bakanı Mehmet Şimşek, stated that the Turkish economy can overcome the current challenges by returning to a rational economic approach.
However, the specific decisions that Mehmet Şimşek will make and how they will impact the economy are yet to be seen. However, it is anticipated that a tight monetary policy will be implemented. The most significant challenge for the economic administration is inflation.
Indirect taxes can be increased
According to Prof. Dr. Serdar Sayan, the Director of the Social Policies Implementation and Research Center (SPM), it is necessary to expect an increase in indirect taxes in the new period of the economy.
In an interview with Şehriban Kıraç from Cumhuriyet, Prof. Dr. Serdar Sayan stated that the future course of employment will depend on the growth performance of the Turkish economy. He mentioned that it is currently difficult to predict how this performance will be and that it depends on the economic policy to be pursued.
Regarding the question of whether the citizens should expect bitter medicine, Prof. Dr. Serdar Sayan responded: “What awaits the economy and all of us depends on what model will be introduced instead of the current unsustainable framework and when. In the first place, we should definitely expect significant price and tax increases. The price increases that have been delayed due to the elections are imminent. Then, resources will be needed to finance social security institutions and other public expenditures. There will be significant increases in many indirect taxes.”
He also emphasized that the current interest rate policy is unsustainable, saying: “Two factors that will increase the pressure on inflation are the growing public deficit and, more importantly, the depreciation of the exchange rates. Market-based interest rates have become almost independent of the policy rate, but even the current interest rate policy is clearly unsustainable. The indirect increases through social security institutions and similar mechanisms, without explicitly raising interest rates, delay facing the problems and make the problems even bigger when they eventually need to be confronted.”
Please note that the information provided is based on the given statement and should be interpreted as such.