“We will end 2019 with a historic soft landing in terms of gross domestic product,” Albayrak said at a meeting with journalists in Istanbul, adding that inflation will keep being a major indicator for 2020.
Turkey has developed a financial architecture which is designed to minimize the effects of external political risks, Albayrak said, adding that 2020 will be a year to fine-tune the economy.
He noted that between June 2018 and June 2019 Turkey was faced with attacks on its currency, but the Turkish Lira has stabilized over the past six months.
The minister noted that the risk premium indicator, namely the country’s five-year CDS – credit default swap – has improved significantly as well as the yield on two-year government bonds.
Turkey’s CDS declined as much as 337 basis points since August 2018, according to Albayrak.
“2019 was a difficult year but the Turkish economy managed to achieve a soft landing,” he said, adding that last year the economy scored a positive growth.
“We are moving toward a balance growth path.”
The official gross domestic product (GDP) data for the final quarter of last year have not yet been released.
In the third quarter of 2019, the Turkish economy expanded at 0.9 percent on an annual basis, after contracting 1.6 percent year-on-year and 2.3 percent year-on-year in the second and first quarters, respectively.
The government’s growth target for 2019 is 0.5 percent. In the new economic program, unveiled in September last year, the government forecast that GDP growth will pick up to 5 percent this year.
Fighting inflation and reforms
2019 marked a milestone in taming inflation, and inflation will remain an important anchor in 2020 and beyond, Albayrak also said, noting that the annual inflation rate in 2019 remained below the 15.9 percent target set in the economic program.
The minister also vowed to take measures aimed at eliminating risks from food prices.
According to Albayrak, expansion in loan volume will not create inflationary pressures in 2020.
“We are keeping a close eye loan growth.”
Albayrak, however, said that private banks’ performance last year was poor in terms of slashing their interest rates despite the rate cuts the Central Bank delivered last year.
Private banks are now seeking customers to extend loans with single-digit interest rates. “It is going well and it will get even better.”
Albayrak dismissed comments that public banks would report losses for 2019.
“On the contrary, those lenders will record profit.”
He added that budget discipline and public finance will also continue to serve as key anchors and said that Canal Istanbul does not pose any risk to the budget or the economy.
“It is a reasonable, doable project.”
“Our road map prioritizes a change in the economy. We will undertake his change together with the private sector,” Albayrak said.
Hurriyet Daily News