Turkey’s national income per capita rises upon new formula

ANKARA

The Turkish government has revised its national income per capita from U.S. dollar terms into income based on purchasing power parity amid a dramatic loss in the Turkish Lira’s value against the dollar in its new Medium-Term Economic Program, which was published in the Official Gazette on Oct. 11. 

With the change, the government’s national income per capita target rose to $19,506 from the previous target at $10,936 upon the dollar basis formula. 

If this change had not been made, the country’s national income per capita would have decreased below $9,000 over this year with a loss of around 25 percent in the lira’s value to the dollar over this year, said renowned economist Uğur Gürses in his column for daily Hürriyet on Oct. 12. 

For 2016, the per capita income is expected to reach $20,313, while it is expected to rise to $21,377 in 2017 and $22,680 in 2018, according to the new program. 

The country’s national income per capita rose by 37 percent in 2008 after a change in the calculation formula.  

The Turkish government has also downgraded its 2015 growth forecast to 3 percent from 4 percent in the light of severe fluctuations in global markets. 

Growth forecasts revised down 

The growth forecast for 2016 was cut from 5 percent to 4 percent, and to 4.5 percent from 5 percent for 2017.

The program expressed concern about the U.S. Federal Reserve’s probable interest rate raise, which will pressure emerging-market economies at a time when the Turkish economy is beginning to recover.

Finance Minister Mehmet Şimşek said downgrading the GDP growth is not only the case in Turkey, in a televised interview on Oct. 12. 

“The International Monetary Fund [IMF] also revised its growth forecasts for all countries. Global shocks have affected all of us. Our growth forecast is 3 percent for this year, while the Russian and Brazilian economies are shrinking. This figure is a success for Turkey amid severe shocks around,” he said during an interview with Turkish A Haber. 

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

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

The government also 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 2017 and 4.4 percent in 2018   
A year-end inflation forecast was increased to 7.6 percent in the new program from 6.3 percent in the previous program, while a target of 5 percent for the next two years also changed to 6.5 percent for 2016 and 5.5 percent for 2017. The program added Turkey will expect to reach its inflation target at 5 percent by 2018. 

The new program has also predicted the unemployment rate will be 10.5 percent this year, 10.3 percent in 2016 and 10.2 percent in 2017. The export target has also been revised down along with the new program.

The target was revised from $173 billion to $143 billion for this year, from $187.4 billion to $150 billion for 2016 and from $203.4 billion to $170 billion for 2017.