Inflation’s rise to 9 pct no good for Turkish economy, says Deputy PM Babacan

WASHINGTON - Anadolu Agency

A vendor sells potatoes to a customer in an open market in central Ankara. REUTERS Photo

A rise of inflation of up to 9 percent bodes ill for Turkey, and the government and the Central Bank must reduce inflation rates to manageable levels in the forthcoming period, said Deputy Prime Minister Ali Babacan.

“Inflation numbers rising up to 9 percent are not good for Turkey. It will be the first priority of the government and the Central Bank to reduce [the numbers] to manageable levels in the forthcoming period. We will be closely watching inflation numbers, as we already cited in our Medium Term Economy Program, which will be used to determine our economic agenda for the next three years,” Babacan said.

He noted stricter finance policies and lower budget deficit would definitely help in the coming period, adding that pricing in some goods and services would be carefully set by the government by closely watching the risk of higher inflation rates.

“We will have an inflation-observant pricing policy in any goods and/or services upon which the state has direct and/or indirect effect, such as in food and energy sectors. The Central Bank plays a crucial role in fighting against higher inflation by means of its monetary policies. Price stability is one of the biggest priorities of our Central Bank, which is supporting the growth and stability policies of our government right now by considering not to contradict its own priority of price stability,” he said.

Stricter financial policies and lower budget deficits will be the most useful tools at the World Bank/IMF Annual Meetings, he also said.

1.2 million new jobs

Babacan said the Turkish government would also try to decrease Turkey’s current account gap in a decisive manner, adding that higher growth rates and employment rates could then be expected.

“Some 1.2 million new jobs were created in the last 12 months. This is a huge increase. We succeeded in adding 1.2 million new jobs by growing 4.1 percent last year and 3.3 percent this year. This is only possible thanks to high confidence in our economy. The private sector continues to hire new people as they have confidence in the future, enabling the economy to rise and employment rates to increase,” he said.

Turkey aims to grow 4 percent this year, Babacan said, adding that the government would continue to make structural reforms and increase productivity levels to reach its growth targets.