Finance Minister Simsek underscores the importance of price stability for economic growth, as he discusses the issue of disinflation.
In 2025, Turkey's economy has shown a mix of progress and challenges. The Turkish government has implemented various measures aimed at stabilising the economy and improving the living conditions of its citizens.
According to the Turkish Finance Minister, Simsek, the government's Medium-Term Program has contributed to more balanced growth and stronger financial conditions. One of the significant achievements has been the surge in international reserves, reaching an all-time high of $174.4 billion as of August 8.
However, inflation remains a concern. Despite a decrease in annual inflation to 33.5% in July 2025, it still remains high. The Turkish Central Bank has kept its year-end inflation forecast at 24%.
The minimum wage increase in 2025 was well below the annual inflation rate of 44.38%. For 2025, the minimum wage was increased by 30% to ₺22,104 ($540). This increase, however, was well above inflation, as Simsek noted the government has aimed to protect citizens' income while fighting inflation.
Wage earners have also been granted tax relief, further supporting their income.
The Turkish economy grew 2% year-over-year in the first quarter of 2025, slowing from 3% in the previous quarter. This growth rate reflects the ongoing efforts to manage the economy amidst high inflation.
In terms of the current account deficit, there has been a notable improvement. The deficit narrowed to $10.19 billion in 2024 from $39.87 billion in 2023. However, in the first half of 2025, the deficit widened to $23.09 billion.
The Turkish lira has depreciated by 19% since the beginning of the year, according to official figures. This depreciation could be a factor in the widening current account deficit.
On a positive note, the five-year Credit Default Swap (CDS) premium has retreated significantly, from its peak at 882.20 in July 2022 to 264.92 in 2025. This indicates improved confidence in Turkey's economy.
Foreign investment also played a role in the economy's recovery. Net acquisition of financial assets by foreigners surged to $9.5 billion in 2024.
Simsek stated that between December 2002 and July 2025, the lowest monthly pension increased by 621% in real terms. This increase, along with the minimum wage adjustments and tax relief, indicates a government commitment to improving the living standards of its citizens.
Despite the progress made, Turkey's economy still faces challenges, particularly in managing inflation and the current account deficit. The government's ongoing efforts to stabilise the economy and protect citizens' income will be crucial in navigating these challenges.
