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The finance minister of Turkey says that the Turkish economy is returning to a "positive cycle".

Mehmet Simsek, the Finance Minister of Turkey, said that after March's market turmoil, Turkey has now returned to a positive cycle.

Simsek, in an interview live with Kanal 7, said that all financial indicators have returned to the mid-March level with the measures taken to manage the economic situation.

Detention of Istanbul mayor Ekrem Imamoglu on 19 March, the main political rival to President Tayyip Erdoan, triggered market turmoil, which led to an increase in emergency interest rates and depleted foreign currency reserves.

The Turkish central bank cut its benchmark rate this week by more than expected 300 basis points, to 43%. This is a return of the easing cycle which was interrupted in March.

Moody's, the credit rating agency, upgraded Turkey's ratings to "Ba3", from "B1" on Friday. The upgrade was based on improved monetary policy credibility and lower inflation.

The Turkish government anticipates that the inflation rate will be "between the mid-point and high forecast range" of the central bank by the end of the year. Simsek stated that he expected a figure of below 29%.

The annual inflation rate for Turkish consumer prices slowed in June to 35%, continuing its decline from a high of 75% in may 2024. The mid-point of the central bank's forecast for year-end inflation is currently at 24%.

Simsek stated that the Turkish economy has been growing below expectations in recent months. There is "a high probability" that budget revenue targets will be met with a small deviation, he said.

According to its policy roadmap for the next three years, published in September last year, the government expects a 4.0% growth of gross domestic product this year. According to the median prediction of 34 economists who participated in the poll conducted between July 18 and 23, the growth of Turkey's GDP this year is expected to be slower than the 3.2% projected for 2024. Reporting by Huseyin Haatsever, Editing by Peter Graff

(source: Reuters)