New plan targets 5.5 percent growth

ANKARA - Anatolia News Agency

A draft of Turkey’s 10th five-year economic development plan for 2014-2018 targets an annual growth rate of 5.5 percent, an inflation rate of 4.5 percent, an unemployment rate of 7.2 percent, a $1.3 trillion GDP and an export volume of $277 billion by the end of 2018. DAILY NEWS photo, Emrah GÜREL

A draft for Turkey’s 10th five-year economic development plan for 2014-2018 that has been sent to Parliament aims to reach an annual growth rate of 5.5 percent, an inflation rate of 4.5 percent and an unemployment rate of 7.2 percent by the end of 2018.

The Ministry of Development said they planned to upgrade the economy’s potential growth to achieve the 5.5 percent rate goal. The plan aims to increase the gross domestic product (GDP) to $1.3 trillion and income per capita to $16,000.

The export volume, which was $152.5 billion last year, is aimed to rise to $277.2 billion by the end of 2018 with an annual 11.9 percent increase. The import volume is aimed to reach $404.3 billion by the end of 2018 from $236.5 billion last year with a 9.9 percent annual increase. If the goals are achieved, the current account deficit will be $127 billion and the ratio of the current account deficit to the GDP will be around 10 percent. However, the current account deficit is planned to be $67.1 billion by the end of 2018 and the ratio of the current account deficit to the GDP is set to be reduced to 5.2 percent from 6 percent in 2012.

The plan foresees creating 4 million new jobs with a 2.9 percent annual increase. Labor force participation rate is aimed to increase to 53.8 percent by the end of 2018 from 50 percent last year. A 2 percent decrease in the unemployment rate is targeted. As the plan envisages decreasing the unemployment rate from 9.2 percent in 2012 to 7.2 percent.

“The 10th development plan will lead the country to approach the 2023 targets that aim to reach a $2 trillion GDP, $25,000 income per capita, $500 billion exports and a 5 percent unemployment rate,” the ministry said in a statement. The draft of the plan was presented to Parliament on June 14.

4.5 pct inflation rate

However, the development plan aims to reduce the inflation rate to 4.5 percent by the end of 2018 but the annual rate of increase is aimed to be fixed at 5 percent in the first years of the plan. According to the plan, inflation targeting regimes, which have proven successful at controlling inflation, have been applied since the beginning of 2000, before the global economic crisis. Developing countries sought new trends in monetary policies in order to add new factors about financial stability into the inflation targeting regime and restrict the negative affects which come from developed countries’ monetary expansion policies.

The floating rate of exchange regime will continue to be applied in framework of the plan. In case of observing unhealthy price formation and excessive volatility, the markets will be directly intervened in.

The budget set aside for social security from the central administration budget will be reduced. The ratio of the budget to the GDP will decrease to 4 percent from 4.5 percent last year.

The plan envisages that the private sector’s share in research and development expenditures will increase to 60 percent.