Türkiye’s Economic Team Holds First Investor Meeting since Policy U-Turn

A street seller at work with a picture of Turkish President Recep Tayyip Erdogan in the background in Istanbul Türkiye, 03 August 2023. (EPA)
A street seller at work with a picture of Turkish President Recep Tayyip Erdogan in the background in Istanbul Türkiye, 03 August 2023. (EPA)
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Türkiye’s Economic Team Holds First Investor Meeting since Policy U-Turn

A street seller at work with a picture of Turkish President Recep Tayyip Erdogan in the background in Istanbul Türkiye, 03 August 2023. (EPA)
A street seller at work with a picture of Turkish President Recep Tayyip Erdogan in the background in Istanbul Türkiye, 03 August 2023. (EPA)

Türkiye’s new-look economic team met for the first time with dozens of international investors on Friday and pledged to continue hiking interest rates, even as economic growth slows, to head off rebounding inflation, two sources said.

According to the sources and a draft program, the eight-hour meeting in Istanbul included Finance Minister Mehmet Simsek and Central Bank Governor Hafize Gaye Erkan discussing monetary and fiscal policy and the economic outlook.

The face-to-face meeting with more than 40 investors marks a more transparent market turn by the authorities, and comes two months after President Recep Tayyip Erdogan named Simsek and Erkan to the positions to orchestrate a U-turn toward more orthodoxy.

The two sources, who requested anonymity to discuss details of the private meeting, said Simsek stressed that reducing inflation was the priority and struck a confident tone that policy was returning to more normal settings.

He told investors that Erdogan fully supported the monetary tightening and that "gradual" rate hikes would continue, pinching credit and leading to somewhat slower economic growth but not a sudden stop, one of the sources said.

The central bank under Erkan has raised its key rate by 900 basis points to 17.5% since June, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58%, meeting expectations.

Under the previous governor, the bank had slashed rates to 8.5% from 19% in 2021 in line with Erdogan's unorthodox belief that high rates fuel inflation. That sparked a currency crisis and the lira weakened 44% in 2021, 30% in 2022, and another 30% so far this year.

Inflation touched a 24-year peak of 85.5% last October. It subsequently eased but then rose sharply again in July to nearly 48%.

Reuters reported on Thursday that Wall Street bank JPMorgan was hosting the investors meeting.

The program obtained by Reuters showed Burak Daglioglu, head of the presidency's investment office, was to give a presentation on Türkiye as "your resilient investment partner".

Vice President Cevdet Yilmaz, Ziraat Bank CEO and Turkish Banking Association head Alpaslan Cakar, and the heads of Türkiye’s wealth fund and treasury debt office were also scheduled to speak, the program showed.

JPMorgan declined to comment on the meeting. The central bank and finance ministry did not immediately comment.

Some foreign investors have edged back into Turkish assets since Erdogan's re-election in May and subsequent U-turn, after a years-long exodus due largely to the unorthodox approach.

Since Erkan delivered a quarterly inflation report last week, investors have said they welcomed prospects of officials holding more regular meetings. The last in-person meeting with a Turkish central bank chief was in late 2022, they said.



French Minister: EU Still Far from Tariff Deal with US

French economy minister Eric Lombard (center) says the European Union and the United States were still far from a tariffs deal. Jim WATSON / AFP
French economy minister Eric Lombard (center) says the European Union and the United States were still far from a tariffs deal. Jim WATSON / AFP
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French Minister: EU Still Far from Tariff Deal with US

French economy minister Eric Lombard (center) says the European Union and the United States were still far from a tariffs deal. Jim WATSON / AFP
French economy minister Eric Lombard (center) says the European Union and the United States were still far from a tariffs deal. Jim WATSON / AFP

The European Union and United States are far from reaching a deal on tariffs, France's economy minister said Thursday, as the bloc seeks a way out from trade tensions with Washington.

US President Donald Trump has slapped new 10 percent tariffs on most trading partners since returning to the White House in January, and imposed sharp levies on imports of steel, aluminum and autos, AFP reported.

The EU has not been spared, and a 90-day pause on even higher rates, including for goods from the bloc, is due to expire in early July.

"We're not going to hide the fact that we're still a long way from an agreement," said French economy minister Eric Lombard in an interview with journalists on the sidelines of the International Monetary Fund and World Bank's spring meetings in Washington.

But at an IMF event Thursday, German Finance Minister Joerg Kukies said he was hopeful both sides could reach a deal before the 90-day window closed.

"We're optimistic that it will work, the sooner, the better," he said.

France's Lombard maintained that talks with US officials were warm.

He said he met this week with director of the White House National Economic Council Kevin Hassett, US Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent.

Lombard noted a desire from his counterparts to "move forward as quickly as possible," adding that Europeans have been described as friends and allies in the context of these talks.

He said both sides are looking for areas where they can make progress, adding that "workstreams" have been opened up to remove obstacles to exchanges.

Adding that Trump's new tariffs weigh on the US economy, Lombard said he hopes these effects "will push the administration to propose adjustments."

"We want tariffs to return to previous levels, and even lower if possible," he said, adding that he expects "ups and downs" in negotiations.

Earlier this year, Trump accused the 27-nation bloc of being created to "screw" the United States.

The White House has also said Trump's "reciprocal tariffs" were focused on countries that had been "ripping off" the world's biggest economy.