Turkish Economy Needs Deep-Rooted Transformation

Turkey needs “deep-rooted, sectoral transformation” in the economy for sustainable growth, Deputy Prime Minister Mehmet Simsek said Tuesday.

“A sustainable high growth rate, comprehensiveness of this growth, and fair income distribution are essential. We need to provide more deep-rooted, sectoral transformation to achieve a sustainable growth of over 7%, which calls for limiting the side effects i.e. current account gap, inflation,” Simsek told Fox TV, as quoted by state-run Anadolu Agency.

His remarks came a day after the Turkish Statistical Institute, TUIK, revealed that the country’s economy expanded by 7.4% in the first quarter of this year compared with the same period last year.

The three-month gross domestic product at current prices climbed to around 792.7 billion Turkish liras (nearly $207.5 billion), according to TUIK data.

Simsek forecasted growth will be rebalanced after the second half of the year and the domestic demand will ease. “The Turkish economy has grown on domestic demand,” he said, adding that it created a current account deficit problem.

Turkey’s current account deficit hit $5.43 billion in April, marking an increase of $1.7 billion, year-on-year, the Turkish Central Bank announced on June 11. “Our primary priority is to fight against inflation and decrease current account deficit,” Simsek said.

The minister added the inflation stemmed from the loss in the value of the lira against other currencies and the increase in the oil prices.

The country’s annual inflation rate was 12.15% in May, up from 10.85% in April, according to TUIK on June 4.

Simsek also vowed that the public sector would undertake a comprehensive saving policy. “We will sincerely examine the spending items, prioritize in which sectors we will limit spending and apply a comprehensive saving strategy. This is the most ideal step,” he added.