Second-quarter growth expected to be above 7.3 percent: Minister

ANKARA

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The economic growth rate is expected to be above 7.3 percent in the second quarter of 2022, Treasury and Finance Minister Nureddin Nebati has expressed.

“The economy grew by 7.3 percent in the first quarter. We are expecting a growth rate above that in the second quarter,” Nebati said in an interview with private broadcaster NTV on Aug. 23.

The growth is based on a balance between domestic and foreign trade, the minister said, adding that there has been a significant inflow of capital into the country, which manifests itself in the increase in the Borsa Istanbul benchmark index and trading volume.

Those inflows are in the form of foreign direct investments and investments in the property market, Nebati added.

The minister also said that Türkiye would face no problems financing the current account deficit, recalling that the deficit was $13 billion last year and stood at $32.7 billion as of June.

The annual inflation rate will enter a downward trend in December due to the base effect, and the decline will continue through 2023, Nebati said.

‘Türkiye needs investments, not rate hikes’

Türkiye needs to boost investments, employment, production and current account surplus not to increase interest rates, President Recep Tayyip Erdoğan said following a cabinet meeting on Aug. 22, urging people to put their savings in Turkish Lira deposit accounts.

“The interest rate-exchange rates-inflation equation has been the most challenging test for the Turkish economy lately,” Erdoğan said, recalling that the country’s economic model is based on growth through investments, production and current account surplus.

Some fail to grasp the reasoning behind this model, the president expressed. “But we know what we are doing and how to do it.”

While the world economies are struggling with threats from elevated inflation and high unemployment rates, Türkiye managed to achieve strong production, export and employment levels thanks to its own economic model, Erdoğan said.

He furthered that the high inflation rate seen over the past one year in Türkiye should not be compared with the inflation that emerged during the crises back in 1994 and 2001. “As today the inflation does not stem from budget or unemployment but due to price movements triggered by global developments. It is cost-push inflation. The price increase is a problem which could be overcome in an environment where the budget performance and economic activity are strong and employment level is high,” Erdoğan said, adding that the budget discipline will not be compromised.

“In our model, those who invest and engage in trade activities will win. I am asking citizens and businesspeople to trust their country and their own currency. There is no reason for people to worry about the value of the currency and turn toward gold and foreign currencies.”

“I urged those who have their savings in gold and foreign currencies to return to Turkish Lira deposit accounts.”