Turkish Finance Minister Mehmet Simsek said that the government’s GDP growth target of 4% for 2013 is achievable, if the current recession in Europe does not deepen, as declining borrowing costs fuel domestic demand. Looser monetary policy neutralises tightened fiscal policy, Simsek added.
The government’s Medium Term Program 2013-2015 goals for a greater soundness, with the central government budget deficit/GDP being 1.8％ and the public debt/GDP being 31.0% in 2015, is highly attainable, the rating agency JCR commented last week when it upgraded Turkey’s ratings to the investment grade.
Earlier this month, the Central Bank cut the benchmark rates to spur growth and prevent an appreciation of the local currency amid strong capital inflows. The Bank cut its main policy rate (one-week repo rate) by 50bps to 4.5%. It also lowered the overnight borrowing and lending rates by 50bps to 3.5% from 4% and to 6.5% from 7%, respectively.
| Turkey | ||
| (%) | 2013 | 2014 |
| European Commision Forecasts (May 2013) | ||
| GDP growth | 3.2 | 4 |
| Annual Inflation | 6.6 | 5.6 |
| Current Account Deficit / GDP | -6.8 | -7.2 |
| Unemployment | 8.6 | 8.8 |
| Government's Medium-Term Programme (October 2012) | ||
| GDP growth | 4 | 5 |
| Annual Inflation | 5.3 | 5 |
| Current Account Deficit / GDP | -7.1 | -6.9 |
| Unemployment | 8.9 | 8.8 |
| IMF World Economic Outlook (April 2013) | ||
| GDP growth | 3.4 | 3.7 |
| Annual Inflation | 6.6 | 5.3 |
| Current Account Deficit / GDP | -6.8 | -7.3 |
| Unemployment | 9.4 | 9.5 |
| Source: ec, dpt, imf | ||
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