Mehmet Şimşek is the sign of hope for the resurgence of the Turkish economy

Following his election victory on May 28th, President Erdoğan’s cabinet appointments had been a source of speculation. Analogous to general predictions, President Erdoğan has assigned Mehmet Şimşek as the Minister of Treasury and Finance. International markets regarded his appointment as an improvement as he is known for his orthodox and market-friendly policies.

05/06/2023 18:00 Güncelleme: 05/05/2024 18:37

After eight years, Mehmet Şimşek, former deputy Prime Minister, Economy Minister, and State Minister for the Economy, has been reinstated to office.

The announcement came last Saturday night, following a week of speculations after the presidential election.

Şimşek, who holds a Master’s degree in finance, is internationally known for his market-friendly economic approach.

His policy and practices instated confidence in Türkiye to recover from the economic crisis it has been in for the past half a decade.

“RETURN TO RATIONAL ECONOMICS”

Şimşek, 56, spoke at his inauguration conference yesterday and signaled the restoration of orthodox economic strategies, raising market hopes.

“Türkiye has no choice but to return to a rational ground,” said the new Finance Minister during the handover ceremony.

“Transparency, consistency, predictability, and compliance with international norms will be our basic principles in achieving this goal in the upcoming period,” Şimşek added.

He also said that increasing macro-financial stability by strengthening institutional quality and capacity will be Ankara’s top priority.

According to him, limiting inflation to single digits is fundamental to improving predictability and building up structural transformations that will reduce the current account deficit.

These words by Şimşek indicated better days for the Turkish economy, which is going through a cost-of-living crisis due to the unorthodox economic path it has taken.

“Transparency, consistency, predictability, and compliance with international norms to return to a rational ground” are the words the market wanted to hear, and these words point to a properly functioning economy that is stable and investable.

Şimşek’s promises can also allure foreign funds, which is a central factor of economic growth in countries like Türkiye. With a hike in interest rates, a comedown of inflation, and investments combined, the Turkish economy can ascend out of crisis.

A NEW HOPE

International actors expect Şimşek, a well-decorated market veteran, to put Türkiye on the right track. These expectations have been reflected in the media coverage as well.

Mohamed El-Erian writes to Bloomberg that if Şimşek is provided with the necessary authority and time - combined with market patience, domestic confidence, external assistance, and President Erdoğan’s backing - he can succeed in his duties as the Finance Minister.

So for El-Erian, it is only a matter of time and autonomy before Şimşek leads Türkiye into prosperity.

CNBC’s Lee Ying Shan cited BlueBay Asset Management’s Senior EM Sovereign Strategist Timothy Ash as saying, “The Turkish economy has a chance of pulling back from the brink.”

A report from world-giant Goldman Sachs stated that Şimşek symbolizes a return to established economic policies.

US-based Politico’s comments on Şimşek’s mandate are similar, with the lower-header reading, “A new Turkish cabinet offers hope of a policy U-turn.”

Reuters and Middle East Eye also conclude an identical analysis, which falls in line with nearly all international media outlets in the sense that a more conventional economic policy is on the way.

Adam Samson from Financial Times describes Şimşek as an “investor favorite” and points to a more traditional Turkish economy even before the new Finance Minister started his directive.

Şimşek is the “darling of the markets” not because investors like his personality but because he is, as described by many, “a logical economist.”

Investors like to be able to see ahead. Logically, that predictability comes with stability. The lower the risk of fluctuations, the better the investors can position themselves.

Şimşek posits that he set sail to build such an economy in which investing in would be safe and profitable. These policies are sure to yield growing public welfare.

Mansur Ali Bilgiç - 5/6/2023

Türkiye