Turkey will probably achieve 3% GDP growth this year, finance minister

By bne IntelliNews September 9, 2015

Turkish economy will probably achieve a 3% GDP growth this year, Reuters quoted on September 9 Finance Minister Mehmet Simsek as saying.

Economy Minister Cevdet Yilmaz has also commented on September 8 that Turkish economy may grow 3% this year and a higher growth rate is expected next year. Turkish government seems to keep optimistic despite domestic and regional uncertainties, although expectations of the international institutions and the market have been deteriorating recently. Despite the deteriorations in the expectations, markets and international institutions’ estimates still hover around 3% GDP growth for Turkey in 2015.

Outlook on Turkish economy has been shadowed by political uncertainties, however, Simsek believes that investments will not be affected negatively in the long-term. The main risk for Turkey is long-term political instability and political uncertainties are also main driver behind the fluctuations in the exchange rate, according to Simsek.

Simsek also said that the current provisional government will make the budget this year and will also update the targets in the medium term programme. The law for the provisional budget should definitely be approved by the parliament within December, Simsek informed. Simsek also commented that fast growth period for emerging markets has come to an end, and moderate loan and GDP growth are also crucial for the welfare of Turkey. Allowing consumption growth would force Turkey under current conjuncture, Simsek said, adding that macro-prudential policy set should continue.

Credits extended by local banks increased by 26% y/y to TRY1.43tn (€425mn) as of end-July, data of the banking watchdog BDDK showed on August 31. Thanks to tuff macro-prudential policies, loan growth decelerated to 14.35% y/y as of January 23, however, then it started to accelerate again. The government and the central bank believe that annual loan growth should be kept under 15%, so strengthening in the policy set may be expected in the coming days.

Simsek also said that the government will achieve privatization targets this year and he believes that they can easily achieve TRY10bn worth privatizations next year. Privatization and funds income stood at TRY6.8bn in January-July, according to the Treasury’s recent cash budget announcement on September 7.

GDP Growth Projections for Turkey  
(%) 2015
EBRD (May 2015) 3.0
European Commission (May 2015) 3.2
Turkish Government - Medium Term Programme for 2015-2017 (Oct 2014) 4.0
IMF (April 2015) 3.1
Turkish Central Bank survey (July 2015) 3.0
World Bank (Apr 2015) 3.0
OECD (June 2015) 3.1
Reuters Poll (September 2015) 2.9
Source: ebrd, ec, dpt, imf, tcmb, oecd, world bank, s&p, kap  

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