Turkey Better Positioned Amid Global Trade Risks: Şimşek

Turkey's Finance Minister Mehmet Şimşek stated that the country is likely to fare better than other emerging markets affected by Donald Trump’s trade tariffs, citing its manageable exposure to U.S. trade policy and the recent decline in oil prices.

In an interview with the Financial Times, Şimşek explained that falling energy costs would help narrow Turkey’s current account deficit, thereby supporting the rebuilding of international reserves—a key indicator of the macroeconomic reform program launched roughly 18 months ago.

Turkey’s Trade Structure Shields It from Tariff Impact

According to Şimşek, Turkey’s $1 trillion economy is relatively insulated from U.S. tariff measures. This is because 80% of Turkey's trade is conducted with countries either in the EU customs union, in free trade agreements, or with "friendly neighbors" in the Middle East, North Africa, and Central Asia.

While the Trump administration has imposed a 10% base tariff on Turkish exports to the U.S., Şimşek remains optimistic:

“All of this is relatively constructive. Once the dust settles, we believe Turkey can stand out positively from more troubled emerging markets in Asia and elsewhere in the eyes of investors.”

Political Volatility Tests Economic Reform

Şimşek’s reform agenda is now undergoing its most severe test, following the arrest of Istanbul Mayor Ekrem İmamoğlu, a prominent opposition leader and President Erdoğan’s main political rival. The incident triggered a sharp downturn in Turkish financial markets.

“There was a significant but short-lived impact from domestic political turbulence. Now it’s tariff-driven,” Şimşek said in the interview.
“In relative terms, our vulnerability is not so severe. We may have to live with slower growth, but the key point is: you have to cope with external shocks like these U.S. tariffs.”

Slower Growth, Budget Pressure—but Fiscal Discipline Remains

Şimşek acknowledged that a slowing economy would reduce tax revenues, potentially resulting in a larger-than-expected budget deficit. Nevertheless, he emphasized that the goal is not to avoid higher debt—which currently stands at around 25% of GDP—but rather to support the Central Bank’s inflation-fighting efforts.

Turkey's budget deficit was projected to fall to 3.1% of GDP in 2023 and 4.9% in 2024.

“Whatever happens, we will maintain spending discipline,” Şimşek said.
“Looking at the big picture—we can live with this.”

Reforms Backed by Rule of Law and Economic Stability

While Şimşek refrained from commenting on politics, he expressed his continued support for:

“The rule of law, price stability, greater predictability, and an improved investment climate.”