Turkey may slash 2013 growth forecast: Minister

AFP, Wednesday 24 Jul 2013

Weak eurozone growth and tightening of US monetary policy forces government to revise growth target

Turkey may have to cut its growth target this year as the economy comes under pressure from weak eurozone growth and a possible tightening of US monetary policy, the country's finance minister said Wednesday.

Having recorded growth exceeding 8.0 percent in both 2010 and 2011, the government was expecting slower growth of just 4.0 percent this year.

However, Finance Minister Mehmet Simsek said in an interview broadcast on news channel NTV that the growth target may have to be further lowered.

"Fed decisions and the international market conditions have triggered risks for a downgrade," he said.

Poor demand in the debt-wracked eurozone -- Turkey's biggest trading partner -- was also hurting Turkish exports.

Turkey, which has grown to become an economic power house in its region in the past decade after a severe financial crisis and IMF rescues, remains extremely vulnerable to rapid flows of foreign capital.

It has recently been hit hard by talk of central banks in the US and elsewhere winding up stimulus policies, raising fears that investments to Turkey may slow.

On Tuesday, the Turkish central bank raised its overnight rate by 0.75 percentage points to 7.25 percent, as it fights to support its currency from a flight of foreign capital. The bank held its key rate at 4.5 percent, however, the level to which it was reduced in May.

The country is running a structural trade deficit estimated at 6.3 percent of gross domestic product this year.

Search Keywords:
Short link: