World Economy

Turkey Forecasts Robust Economy

Turkey Forecasts Robust EconomyTurkey Forecasts Robust Economy

The Turkish government forecast a robust Turkish economy, in the announcement of the new Medium-Term Economic Program on Monday by Deputy Prime Minister Mehmet Simsek.

The program increases the growth forecast for 2015 to 4% from 3% in the previous report, Simsek said in a press conference, The growth rate would be 5% for both 2016 and 2017, Anadolu Agency reported.

He said that economic recovery in the EU is moderate. “This is, of course, positive news for Turkey, because the EU is Turkey’s largest trading partner.” Inflation would fall somewhat from the current annual rate of 8.81%, Simsek said.

The inflation target is 7.5% for 2015, 6% for 2017 and 5% 2018, according to the economic program, Simsek said. These numbers are lower than the previous forecast.

Global output would expand just 3.2% in 2015, with 87% of its coming from developing countries, Simsek said.

 “When we look at the next three years, we expect that the contribution of developing countries to global growth will slow, while the contributions of developed economies will increase,” he said.

 Simsek noted a slowdown in global trade volume. “This affects Turkey as well as all countries,” he added.

Low commodities prices are an advantage for Turkey, but weak demand in commodity-exporting countries, which are seeing slower growth, indirectly affects the country, Simsek explained.

“There is a divergence in monetary policies among developed economies,” Simsek said. “We are at the beginning of interest rate hikes in the US yet accommodative policies continue in Japan and Europe, and it is very early to talk about the rate hikes in these places. In fact, the absence of synchronous rate hikes is obviously a positive development.”

Simsek also noted an important slowdown in capital flows to developing countries. “This affects all emerging economies,” he said.