Türkiye maintains tight fiscal stance to offset global shocks

Treasury and Finance Minister Mehmet Simsek said on Thursday that Türkiye is maintaining a tight fiscal policy to prioritize macro-financial stability and cushion the impact of global structural headwinds, emphasizing that the nation's debt metrics remain far healthier than those of peer economies. Speaking at the opening ceremony of the Istanbul Economic Forum, Simsek highlighted conflicts, trade protectionism, high indebtedness, unfavorable demographics and climate disasters as key challenges facing the world economy.

Fiscal discipline and defense priorities

The government plans to increase defense spending by 229 percent in the 2027 budget to build deterrence, with the value of research and development in defense projects exceeding $100 billion across approximately 1,400 initiatives, Simsek said. Public debt to GDP stands at 22 percent while total indebtedness remains at 91 percent, compared with a 230 percent average for emerging market peers, he noted, adding that the administration targets a 3.1 percent deficit this year against a 5.8 percent global emerging market average. "This year deficit would have been actually closer to two and a half percent, had we not deployed fiscal space to cushion or to, to slow the pass through from crudes to final products," Simsek said.

Infrastructure and energy investments

Ankara is investing in an $8 billion railway project crossing the Bosphorus to connect Beijing with London while encouraging neighbors to finance additional corridors such as the Development Road to improve regional connectivity, the minister stated. The country has boosted the share of renewables in electricity generation to almost 60 percent and set an ambitious 35 percent electrification target as host of COP31, alongside investments in natural gas and oil pipelines to ensure energy supply security. Simsek also noted that Türkiye expanded its network of free trade agreements to 54 pacts, with ongoing negotiations with Japan, Indonesia, the Gulf Cooperation Council and Canada to counter global trade protectionism.

Economic resilience and outlook

The economy grew slightly more than 3 percent over the past year, outpacing the 1.5 percent expansion of trading partners, while historical growth over the last quarter-century has averaged closer to 5.5 percent, Simsek said. Touching on the disinflation process, the minister acknowledged that efforts had largely stalled this year because of the war, stating: "but we're not giving up." He concluded that recent stress in the asset management sector remained contained and that the country maintained sufficient policy space to respond to shocks in an increasingly volatile global environment.