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Gov't foresees higher growth in economy following latest data
Economy Minister Ali Babacan signaled on Wednesday in Ankara that the government would announce a higher estimated growth for this year in a medium-term program to be released on June 15.
The latest data have revealed that the Turkish economy saw 6 percent growth in the final quarter of 2009 over the same months of 2008, well above expectations. The economy only contracted by 4.7 percent in 2009 over 2008, a figure many believed would be far worse. Speaking to a private TV station, Babacan said the government was encouraged by the 6 percent growth and described it as “a positive surprise.”
The trend in the Turkish economy is towards a period of recuperation, the minister said, adding that they expected this outlook to continue during 2010. “We need to take a low base effect into consideration while talking about a recovery here. … We believe the economy has seen the bottom and is now picking up, but it could take more time before we regain our strength previous to the crisis.”
The minister said it was too early to define the revised growth estimate. “But one thing is certain -- we are expecting growth higher than 3.5 percent. We will have to monitor developments in the markets closely,” he explained. The minister said markets still maintain some risks despite the current bright picture. “Take Greece for example. … Any unprecedented development in this market could cripple the entire euro zone.” Babacan said unemployment is possibly the worst risk facing world economies and that most markets foresee such problems getting worse in the months to come. Unemployment, he continued, is one of the major factors delaying a fast recuperation in world markets.
No extraordinary tax hikes
As regards anticipated austerity measures in the months to come, the minister said the government was not considering any “harsh tax measures” now that the markets are picking up. “There is very little possibility that we will introduce extraordinary tax increases. As opposed to the developed economies, Turkey will become a country where taxes are minimized to relatively favorable levels in the years to come.”
Acknowledging that public debt in Turkey is relatively high, the minister said the budget deficit in 2009 was below expectations at TL 52 billion. This is still higher than the average in developed economies, he added. The minister said the ratio of budget deficit to gross national income could be expected to worsen in 2010.
Babacan said public debt would decline by the end of this year but that the government did not believe growth could be accelerated by increasing public expenditure. “We fueled public spending during the first three months of 2009, and the economy shrank by 14.5 percent.” He asserted that economic growth primarily depends on sustainable growth in private industry.
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