4 percent growth rate achievable, says minister

ISTANBUL — Last month the World Bank and International Monetary Fund (IMF) lowered their prediciton for economic growth in Turkey. Minister of Development Cevdet Yılmaz yesterday stressed that no slowdown is expected in the growth rate and the target of 4 percent for this year is achievable. Yılmaz also noted that the increase in exchange rates and interest has not had a negative effect on economic targets or national income. Yılmaz stressed that Turkey is a "safe port," adding that "it is expected that the foreign trade and current account deficits will be reduced because exports scale up more rapidly than imports,"

Yılmaz noted that the ratio of current account deficits to the national income is predicted to take a similar course with what was estimated in the medium-term program, because the national income in dollars will decline with the increase in dollar exchange. Nominal foreign exchange rates showed a stable course in February after the decision by the central bank to increase interest rates following fluctuations in December-January. Data suggests that the increase in exchange rates and interest rates has had no negative impact on the real economy and the increase of real national income per capita.

According to data released by the Turkish Statistical Institute, the monthly industrial production index increased by 7.2 percent in January 2014, which exceeds market expectations, compared with the same period last year. The production of intermediate goods increased by 9.3 percent, durable consumer goods increased by 2.8 percent, consumer non-durables by 8 percent, energy by 2.5 percent and capital goods by 7.4 percent. The uninterrupted increase in the production of capital goods suggests that investment expenses may increase in the near future.

Compared with the same period of the previous year, the import of consumer products increased by 10.1 percent. Not including automobiles, the increase climbed to 14 percent. The fact that the increase in the import of consumer goods that are directly affected by tightened exchange rates shows that expenses of ultimate domestic consumption did not decelerate during the first month. The figures released by the Turkish Exporters Assembly indicates an increase of 6.5 percent compared with the same period of the previous year. The data for February shows that the real sector confidence index rose by 3.2 percent.

It is expected that the annual increase of the Consumer Price Index at the end of the year will stand at about 5.3 percent. However, the upward trend spurred on by exchange rates, the negative impact of interest rates and the possible effects of a decrease in food production, the course of energy prices and expectations will also have an effect on food prices.the minister said.