“The war had a fivefold impact on inflation”

Finance and Finance Minister Mehmet Şimşek answered questions about the agenda in the live broadcast on CNNTürk.

Drawing attention to the impact of the US-Israel-Iran war on Turkey, Şimşek said that many basic raw materials that come to mind, from fertilizer to raw materials for chip production, were produced there, processed and delivered to the world. Şimşek explained that this is a big supply shock and pointed out that no one is immune.

“This shock lasted much longer than expected”

Emphasizing that global growth has been negatively affected and financial conditions have been tightened, Şimşek continued as follows:

“Because global inflation expectations have risen. Rising inflation and worsening inflation expectations affect financial conditions, i.e. global interest rates.

We are following this process intensively. This shock lasted much longer than expected. When you look at global oil supplies, the amount of production and supply affected by today's shock is larger than any shocks of the past. Let's say that if 20 million barrels per day were affected today, the largest shock in the past affected 4.5 million barrels. That's why we take it seriously. It’s a big shock.”

“There are at least 5 points of additional inflation pressure”

Regarding inflation trends in Turkey, Şimşek said: “Without this external shock, there is a high probability that inflation this year would be one click below or one click above 20 percent. Taking into account the primary, direct and secondary effects of the war and the oil price level priced in by the markets for the whole year, there is an additional inflationary pressure of at least 5 points. If inflation was originally supposed to be 21 percent, it is 26 percent. The central bank already has this done.” I moved there. gave his assessment.

Şimşek explained that the longer this process lasts, the more intense its effects could be. He added that all scenarios were evaluated from day one, scenario analysis was carried out immediately after the shock and it was shared with President Recep Tayyip Erdoğan.

“I’m not looking for excuses”

Emphasizing that barrel prices reached $118 in the last three months and that it is impossible to predict and price in these shocks in the program, Şimşek said: “I am not looking for excuses. We have experienced several shocks in 2025. The impact of the war is a big shock. We can manage it,” he said.

“We have reserves of around $160 billion”

Stating that the initial draft of the medium-term program was aimed at addressing extreme risks, Şimşek made the following statements:

“Important elections took place, a major earthquake occurred, an important initiative like the EYT was taken. We have the reality of an exchange rate protected deposit that existed at that time. We prioritized macroeconomic financial stability in this ecosystem. It is difficult to determine the developments outside of you. You always think: “How do I strengthen the body against shocks?”

Stating that they have accumulated reserves, Şimşek pointed out that there are currently about $160 billion in reserves. Since the effects of the shock are being felt significantly, these amounts are valuable and the reserves are sufficient anyway.