Deputy PM Babacan hopeful for Turkish economy in 2015

ANKARA - Anadolu Agency

Deputy Prime Minister Ali Babacan. AA Photo

This year will see stronger economic growth and lower inflation than 2014, Turkish Deputy Prime Minister Ali Babacan, who is responsible for the economy, predicted on Jan. 16.

In an interview with Anadolu Agency, Babacan said 2015 will be a better year than 2014 for the country’s economy.

“The Turkish growth rate of 3 percent for 2014 was fine; in 2015, Turkey will be one of fastest growing economies in the EU,” he said.

Turkey will see strong capital and fund inflows this year and oil prices will continue to be a positive factor, he added.

“Every $10 drop in the oil price decreases the current account deficit by $4.4 billion; the effect of declining oil prices will be felt in Turkey by June,” he said.

Turkey’s energy bill is expected to drop by half in 2015 if oil prices remain around the $50 per barrel mark, according to economists.

The total current account deficit in the January to November period of 2014 narrowed to $38.7 billion, indicating a decrease of $18 billion compared with the same period in the previous year, the Central Bank stated on Jan. 13.

Thanks to the decline in the price of oil, Turkey will also be able to reduce inflation to around 6 percent, perhaps even to 5 percent level, and to boost its growth rate to 4 percent in 2015, Babacan said.

The number of participants in the Individual Pension System has increased to 5.1 million over the past year, up from about 3 million at the beginning of 2013, with the encouragement of state contributions making up 25 percent of pension deposits. The total pension fund volume recently reached 37 billion Turkish Liras ($16.1 billion), up from 20.3 billion liras ($9.5 billion), he added.

Regarding improvement of the investment climate, Babacan announced that there is a package aimed at supporting industrial investments being prepared, and it will be announced within one month.

Babacan also said that Turkey expects a large amount of fund inflows and capital inflows in 2015.

The government wants to create a system for private companies seeking to borrow money using equity-based financing. The Turkish private sector has long-term debt of about $162 billon.

Babacan said that the government wants its citizens to keep their gold in banks instead of hiding it under their mattresses.

It is believed that over 5,000 tons of gold, currently worth close to $200 billion, are kept at home by Turkish residents as a form of personal savings, and therefore kept out of the banking system.

Babacan also said that, under its presidency of the G-20 in 2015, Turkey will work for the establishment of a permanent secretariat for the organization.