Turkey Officials Tell Investors War May Dent Growth, Lift Prices
Turkey’s top economic policymakers told investors this week that the fallout from the Iran war is likely to weigh on Turkish growth and raise price pressures in the short term, according to people with knowledge of the conversations.
Treasury and Finance Minister Mehmet Simsek and central bank Governor Fatih Karahan met with investors in dozens of conferences on the sidelines of the International Monetary Fund’s Spring Meetings in Washington DC as well as in New York City.
Their comments echoed the IMF’s 2026 World Economic Outlook, published this week, in which the fund revised Turkey’s annual growth to 3.4% from 4.2%.
Karahan said inflation readings in April and May are likely to reflect war-driven price pressures, including higher energy prices, the people said, asking not to be identified to discuss closed-door conversations.
The Treasury and Finance Ministry and the central bank declined to comment.
Simsek and Karahan laid out a base-case scenario of oil prices averaging out around $80 per barrel this year, the people said, adding that the officials also flagged upside risks.
Brent rose toward $96.3 per barrel on Thursday as movements through the Strait of Hormuz remained paralyzed. If prices stay elevated, it could strain Turkey’s budget to the tune of some $14 billion, Turkey’s energy minister said last month.
Some people briefed by Karahan characterized the governor’s stance as leaning towards dovish. Still, they said they were left with the impression that the monetary authority would consider raising its policy rate next week. The Turkish officials did not provide any explicit guidance on the policy path, the people said, adding that they pointed to high geopolitical uncertainty.
Turkey’s benchmark rate stands at 37%, though since the start of the war the central bank has been funding from its costlier overnight rate of 40%.
Simsek and Karahan also said the recent volatility has not caused Turkish savers to significantly shift from the lira toward foreign currencies — a move that would have exacerbated pressures on the lira stemming from foreign outflows, according to the people.
The officials even pointed to a recent pickup in foreign inflows, the people said. If such inflows continue, they added, it could lead to discussions on skipping a possible rate hike next week.
bloomberg.com
