CBRT governor: Inflation to decline in second half of 2015
by Anadolu Agency
ANKARAApr 19, 2015 - 12:00 am GMT+3
by Anadolu Agency
Apr 19, 2015 12:00 am
The decline in inflation will become more pronounced during the second half of the year after a partial correction in food prices, Central Bank of the Republic of Turkey's (CBRT) Governor Erdem Başçı said on Saturday, according to the bank's website. Speaking at a presentation to investors during the spring meetings of the International Monetary Fund (IMF) and World Bank in Washington D.C., Başçı said the decline in inflation excluding energy and food had continued in recent months. "Cautious monetary policy along with prudent fiscal and macro prudential policies are having a favorable impact on core inflation trends," Başçı said, and added that elevated levels and high volatility in food prices continued to weigh on headline Consumer Price Index (CPI) inflation. "We expect a partial correction in food prices in the second half of the year regardless of whether conditions are more favorable this year compared to 2014. The Food Committee was established and has begun working," Başçı informed. Food inflation represents 14 percent of overall inflation in the country. The World Bank has forecasted that Turkey's inflation rate will hit 7 percent at the end of 2015. The government's inflation target is 6.3 percent for 2015 and 5 percent for both 2016 and 2017.
Current account deficit and growthThe decline in inflation is boosted by the decline in commodity prices, especially oil, which is also helping the economy on two other fronts: Current account deficit and growth. "The impact of lower oil prices will become more visible in the coming months," Başçı told investors during a presentation. "Adverse impacts of geopolitical developments on external trade are offset by the increasing market share of Turkish exports globally and especially in the European Union. Our firms are quite flexible in shifting to new trade destinations," Başçı said. The current account balance has been improving since 2011. "The current account deficit is mainly financed by long-term borrowing and foreign direct investments," he said. The 12-month rolling current account deficit declined to $42.8 billion (5.4 percent of GDP) in February 2015 from $46.9 billion (5.8 percent of GDP) in September 2014, the World Bank said in its regular economic brief of Turkey on Friday.