Turkey lowers growth forecasts, raises inflation forecast in ‘worst case’ scenario

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The government has revised down its forecast for Turkey’s economy this year, which it now expects to grow 3.2 percent in 2016 and 4.4 percent in 2017, Prime Minister Binali Yıldırım said on Oct. 4 in what he described as a “worst case” scenario. 

Yıldırım also announced a lowering of growth forecasts in the government’s medium-term economic program, which he put down to the “negative global situation.”

The previous program, unveiled in January, anticipated growth of 4.5 percent this year and 5 percent in 2017, but the economy has grown less than anticipated since then, with the failed coup attempt in July exacerbating the slowdown.

Yıldırım predicted that economic growth would rise to 5 percent in 2018 and 2019, adding that he hoped the medium-term program would boost fiscal discipline and strengthen public finances.

“We have reached GDP growth of above 3 percent over this year so far … If we excludeChina and India, we can say Turkey has reached an economic growth rate double the world average,” he said.

Yıldırım added that the program also aims to increase competitiveness, employment and productivity, while maintaining fiscal discipline and strengthening public finances.

Despite “serious problems” in the tourism sector and exports, and with Turkey rocked by terror attacks and the coup attempt, the prime minister said the country’s growth rate remained robust.

“Despite all these problems, we have kept making structural reforms,” he added.

The new medium-term program also raised forecasts for consumer price inflation. It predicts inflation of 7.5 percent at the end of this year and 6.5 percent in 2017, raising the forecast for next year from a previous 6 percent.

Yıldırım said Ankara was determined to reduce inflation to a “low and sustainable level,” targeting 5 percent in 2018 and 2019.

“Fiscal discipline is an indispensable pillar of our economy,” he added.

According to the economic program, the central budget deficit is forecast at 1.6 percent in 2016 and 1.9 percent in 2017. It is forecast at 1.6 percent in 2018 and 1.3 percent in 2019.

The program also forecasts that the current account deficit would equal 4.3 percent of gross domestic product this year, higher than a previous forecast of 3.9 percent.

October/04/2016

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