Turkiye’s trade-off between growth, inflation worth it for Simsek

Turkiye’s trade-off between growth, inflation worth it for Simsek

Turkish Finance Minister Mehmet Simsek signalled the government is unafraid to sacrifice some economic growth as it tries to lower inflation under the watchful eye of President Recep Tayyip Erdogan.Asked whether the Turkish leader would tolerate a period of economic stagnation or worse if price rises can be tempered, Simsek said those trade-offs are “worth living with.”Turkiye is pursuing "sustainable high growth... not boom and bust episodes," he said.“My sense is there will be tolerance to some moderation in domestic demand,” he said at the Qatar Economic Forum in Doha on Wednesday. “So we’re re-balancing growth, we’re changing the composition of growth.”According to Simsek, in the long run there are no trade-offs between growth and disinflation. “In fact, disinflation or low inflation is absolutely essential for sustainable, high growth,” he said.Turkiye’s economic strength in recent years has been predominantly driven by high consumption — though that came alongside cheap borrowing that fuelled an inflation crisis and currency slump. Simsek, a former strategist at Merrill Lynch, was brought in by Erdogan a year ago to revamp that unorthodox monetary policy and lure more foreign capital.Much progress has been made, particularly through a sharp increase in interest rates, and the central bank