Development minister sees no revision of Turkey's macroeconomic targets
by Daily Sabah
ISTANBULJul 28, 2016 - 12:00 am GMT+3
by Daily Sabah
Jul 28, 2016 12:00 am
Emphasizing that the impact on the Turkish economy of the failed attempted coup on July 15 by the Gülenist Terrorist Organization (FETÖ) remained limited, Development Minister Lütfi Elvan said that the government does not intend to revise on its Medium-term Economic Program (MEP), relying on the economy's solid fundamentals.
During a televised interview yesterday with NTV, Elvan said that following the coup attempt, it was unclear to what extent the economy would be affected by the failed coup by military officers loyal to the U.S.-based fugitive imam Fethullah Gülen, who attempted to unseat President Recep Tayyip Erdoğan, adding that the uncertainty in the economic outlook has quickly dissipated thanks to the Turkish economy's solid structure. Elvan pointed out that this week, the ministry expects all economic indicators to show economic performance close to those before the attempted coup, and therefore they see no problems with the state of the economy. Elvan asserted that the MEP growth targets are still reliable.
In January, the government announced Turkey's MEP, covering macroeconomic targets between 2016 and 2018, including growth and inflation. The government accordingly predicts that national gross domestic product (GDP) will increase by 4.5 percent in 2016, and by 5 percent for 2017 and 2018.
While introducing the MEP, Mehmet Şimşek, deputy prime minister in charge of the economy, predicted that growth in 2016 will mainly be driven by domestic demand, but that a portion of that growth will also come from foreign demand, adding that the 5 percent targets for 2017 and 2018 will be achieved through investment and increased efficiency.
The MEP also clarifies the government's inflation target for the same period. Accordingly, Turkey aims to bring the annual inflation rate down over the next three years, from 8.81 percent in 2015, to the 5 to 7 percent range. Şimşek underlined that the inflation rate is forecasted at 7.5 percent in 2016, 6 percent in 2017 and 5 percent in 2018.
Elvan attributed the quick recovery in concrete terms to some extent to the steps swiftly taken by the Central Bank of the Republic of Turkey (CBRT), announcing measures to diminish investor concern within two days following the failed coup attempt. The most striking measures taken by CBRT included a cut to zero of the commission on daily liquidity options for banks, and providing unlimited liquidity to banks to maintain effective operation of financial markets.
Elvan recalled the new communication policy for CBRT, of using all available channels to increase the flow of information between the CBRT and international investors, including regular meetings. This new policy aims to address unrealistic speculations, where investor concerns have been raised with no solid grounds.