By Serap Dogan and Yildiz Tasdelen Erli
ISTANBUL (AA) — Once inflation is brought under control and price stability is achieved, Türkiye’s economy will reach stabilization and relief will only be seen in 2026, the head of private lender Isbank said.
In a statement to Anadolu marking the bank's 100th anniversary, Hakan Aran said that in the first six months of the year, very serious monetary tightening was implemented in Türkiye, as the priority was to ensure price stability and reduce inflation and that the results of the tightening steps are currently being seen.
Noting that the decline in production, demand and employment will deepen, Aran said the stress here also manifested itself in confidence indexes, with the seasonally adjusted real sector confidence index falling below the 100 threshold level for the first time since 2020, indicating deteriorating expectations, and that the deterioration in other confidence indexes (consumer, service sector, retail trade and construction) also continued.
“If our goal is to achieve price stability and reduce inflation, we will also pay the price for this,” he warned.
Saying that he expects economic growth to be around 3.5% this year in Türkiye and that the economy has cooled down as a result, he added: “When we say 'we will fight inflation and bring it under control,’ we need to know that we will experience problems in growth, employment, production and exports.”
Türkiye posted a robust economic expansion of 4.5% in 2023.
“While achieving price stability and paying a price for it, we must address our problems in a multidimensional manner and avoid excesses that would harm our production and export-based economic model. Only in this way can we return to normalcy,” he stressed.
Mentioning the Central Bank’s interest rate decision, he said: “I believe that the Central Bank will not take any action in October but will only signal through verbal and written guidance that it may start to cut interest rates in the following period.”
“I believe that once it is clear that annual inflation and the inflation trend will be permanently shaped below the policy rate level, there will be an opportunity for interest rate cuts of 250 basis points starting in November, and the policy rate can be reduced to 45% by the end of this year and 25% by the end of next year.”
The bank's policy interest rate is at 50% currently.
This, combined with factors such as the control of inflation in Türkiye, the functioning of the economic system and the easing of the burden on the real sector, allows the country to look to 2026 with hope, he noted.
“We expect inflation to fall to around 20% by the end of 2025,” he underlined.
Türkiye's annual inflation rate was at 61.78% in July.
- Isbank
Isbank was established on Aug. 26, 1924 — 100 years ago — with two branches and 37 staff, but now it has 20,000 staff and 1,042 branches, he said.
"There is one thing that has not changed for us since the day we were founded, and that is to carry the same purpose today as our main purpose when we first started our activities: contributing to the growth of the country's economy and increasing employment and welfare," he said.
Aran also noted that Isbank accelerated digitalization steps in the recent period, adding that a new partnership named “Is United Payment Systems Limited” was established in the UK.
Explaining that this cooperation, which started in the UK, continues to develop, he said work for the merger of the Moka Payment Institution, a 100% subsidiary of Isbank, with United Payment Systems in Türkiye has reached the final stage.
He said that this bank, thanks to this merger, will take firm steps towards their goal of becoming a “regional fintech” that will cover an area extending from Central Asia to North Africa and the Middle East, including Azerbaijan, Georgia and the Turkic Republics.
Noting that the bank has already been providing services in Europe for many years through its bank subsidiaries in Germany, Isbank AG, he said that with the new partnerships being established, they are working towards achieving the goal of a digital bank that will primarily cover the UK and the European Union, reflecting the bank's perspective for its future.
*Writing by Gokhan Ergocun and Emir Yildirim