Turkish government lowers economic growth targets

The Turkish government has downgraded its 2015 growth forecast to 3 percent from 4 percent, according to a report in Turkey's official gazette published on Sunday.

Announcing its new Medium-term Economic Program, the Turkish government said that the government’s forecast for 2015 was 1 percentage point lower than the previous target. The growth forecast for 2016 was cut from 5 percent to 4 percent, and to 4.5 percent from 5 percent for 2017.

The Medium-term Economic Program initiates the budget process and covers the period of 2016-2018.  It describes the country's economic goals for the period.

The report expressed concern about the U.S. Federal Reserve's probable interest rate rise, expected by the last quarter of 2015, which will pressure emerging-market economies just at the time that the Turkish economy is beginning to recover. 

Despite the improvement in the U.S. economy recently, the impact of the global financial crisis is still being felt in the EU and in developing countries, and recovery in the global economy is slowing down. Political developments in neighboring countries are additional risks, the report said. And the slowdown in the Chinese economy, which includes banking and credit market problems may spread to the world economy, according to the report.

The Medium-term Program was prepared by taking these external risks and opportunities into consideration.

According to the program, by the end of this year Turkey’s GDP will reach 1.945 trillion Turkish liras ($663 billion)- 17 billion liras less than the projection in the previous program, which was published in October 2014.

The forecast for GDP in 2016 is 2.141 trillion liras ($730.2 billion) for 2016. By 2017, Turkey’s GDP is expected to reach 2.376 trillion liras ($810.3 billion) and 2018 to reach 2.640 trillion liras ($900.4 billion).

The IMF on Tuesday forecast growth in Turkey slowing to 3 percent this year and to 2.9 percent in 2016. 

The government predicted a 5.2 percent current account deficit-to-GDP ratio at the end of 2015, but aims to narrow this down to 4.9 percent in 2016, 4.7 percent for 2015 and 4.4 percent in 2018.

Turkey's current account deficit for 2015 expected to narrow to $36.7 billion from $45.8 billion in 2014, and from $65 billion in 2013, the report said. The deficit will narrow to $34 billion in 2016, down from 49.2 billion in the previous forecast, and then will widen to $34.4 billion in 2017, and to $35.2 billion in 2018.

A year-end inflation forecast was increased to 7.6 percent from 6.3 percent in the previous program, while a target of 5 percent for next two years also changed to 6.5 percent for 2016 and 5.5 percent for 2017. The program added that Turkey will expect to reach its inflation target ( 5 percent)  by 2018. 

The new program forecast Turkey’s average per capita income will reach $19,506 in 2015, based on purchasing power parity. For 2016, per capita income is expected to reach to $20,313, in 2017, $21,377,  and to $22,680 in 2018. 

Exports are forecast to increase to $143 billion in the year, down from $173 billion in the previous program. The program forecast that  exports will be $150 billion in 2016, and $170 billion in 2017.  The country's annual exports are expected to reach nearly $200 billion by 2018.

Imports are expected to decline this year to $208.4 billion from $258 billion in the previous program.