Turkish gov’t announces ambitious growth, inflation and unemployment targets in new plan

The government has unveiled its new medium-term economic program, including a series of ambitious targets in growth, jobs, inflation, and national income per capita. 

The program, which covers the period between 2018 and 2020, was announced in Ankara on Sept. 27 by Deputy Prime Minister Mehmet Şimşek along with Finance Minister Naci Ağbal and Development Minister Lütfi Elvan. 

Turkey foresees economic growth of 5.5 percent this year and inflation of 9.5 percent, Şimşek said, adding that the program, which is updated annually, also foresees economic growth at 5.5 percent between 2018 and 2020. He said the government “aims for better balanced, sustainable and inclusive growth in the upcoming period.” 

“The global economic growth outlook seems to be generally positive until the end of 2020,” Şimşek said, adding that the oil price per barrel was forecasted to be at $55-60 during the medium-term economic program period. 

“A key risk for Turkey in global terms is mainly geopolitical. Developments in the Middle East and North Korea have raised risks in general,” he noted, adding that “escalating protectionism” was another risk. 

Inflation is expected to fall to 7 percent next year and to 5 percent by 2020, Şimşek said, adding that the country would close 2017 with a 9.5 percent inflation rate. 

Turkey’s annual inflation rose more than expected at 10.68 percent in August, data showed early in September, fueled by rising transport and core prices this time. 


$13,000 national income per capita

Şimşek also said Turkey’s national income per capita would “probably hit $13,000”by the end of 2020.

“This threshold is above what the World Bank has set for any country to upgrade to the high income group,” he added. 

The government forecasted a 10.5 percent unemployment rate in 2018, 9.9 percent in 2019 and 9.6 percent in 2019. 

“Turkey will likely close this year with a 10.8 percent unemployment rate,” Şimşek noted.

The unemployment rate started the year at 13 percent in January. It dropped to 12.6 percent in February, 11.7 percent in March, 10.5 percent in April, and 10.2 in May. The June unemployment rate was announced 10.2 percent as well. 

Şimşek also said Ankara aimed to lower the current account deficit-to-GDP ratio to below 4 percent by the end of 2020. 

“We predict that this ratio will regress to 4.6 percent at the end of 2017, 4.3 percent in 2018, 4.1 percent in 2019 and 3.9 percent in 2020,” he said, adding that the government’s budget gap-to-GDP target for 2017 was 2 percent and 1.9 percent in both 2018 and 2019. 

The budget deficit-to-GDP target for 2020 has been set at 1.6 percent, Şimşek added. 

The government also plans to close this year with exports worth $156.5 billion in total, creating a $65.5 billion foreign trade surplus. 

At the same press conference, Ağbal said Turkey would close this year with a 61 billion Turkish Lira ($17 billion) budget deficit, adding that 74,000 new public jobs would be created in 2018.