Turkish 2015 growth seen around 4 pct, inflation falling: Minister

ANKARA - Reuters

Finance Minister Mehmet Şimşek. AA Photo

Turkey’s economy will grow some 4 percent in 2015 and inflation will fall “comfortably” to a Central Bank forecast of 6.1 percent, Finance Minister Mehmet Şimşek said Jan. 15, pledging continued fiscal discipline ahead of a June election.

Şimşek said the economy was expected to have grown about 3 percent in 2014. He also forecast that the current account deficit would fall to 3-4 percent of output if oil prices stay at their current levels.

Turkey could reach at around 3 percent of growth in 2014 despite the negative developments in the global economy, the Fed’s rate policy, the economic problems in the eurozone and regional woes in the Middle East and Russia.

“Our growth forecasts are more positive for 2015 as the world economy has started to revive. Any recovery in the eurozone will also a positive impact. It is also a very small possibility to face some drought conditions this year, as opposed to we did last year. In this vein, we expect to grow at around 4 percent this year,” he noted.

Announcing budget figures for 2014, Şimşek vowed to maintain strict control on public spending as Turkey approaches a parliamentary election scheduled for early June.

“We will not implement an election economy and will maintain budget discipline,” he said, adding that the government is keen to maintain what is widely seen as a record of strong economic management ahead of the polls.

Data out Jan. 15 showed unemployment dipping to 10.4 percent in the three months to November, compared to 10.5 percent between August and October.

Şimşek also said the government expects more private sector investments and some recovery in the domestic demand after the elections in June.

“The problem with the Turkish economy is the lower productivity. We are also not at the desired point in creating more R&D activities. With the latest reforms, we hope to increase the potential growth of the country in the coming period,” he said.

Şimşek noted there is also a need to change the Public Procurement Law and some steps have already taken to make those changes.

“We can make a draft law by considering the practices in the European Union,” he said.

The budget deficit stood at 22.7 billion lira ($9.97 billion) last year, Şimşek told a news conference in Ankara, up from 18.5 billion in 2013 but sharply below a government target of 33.3 billion.

The privatization of state assets contributed 7.8 billion lira to budget revenues while Turkey’s gross public debt stock-to-GDP ratio likely fell to about 33 percent at the end of last year, he said.

The budget showed a deficit of 11.3 billion lira in December and a primary deficit of 9.9 billion, his ministry also said.