Deputy Prime Minister step back on ambitious growth
ANKARA - Anatolia News Agency
Ali Babacan. AA photoDeputy Prime Minister Ali Babacan hinted for the first time yesterday that if the economic situation in Europe were to deteriorate in the coming months, Turkey might be forced to pull down its ambitious 4 percent growth projection for 2012.
The International Monetary Fund and leading Turkish economists already warned that the government’s 4 percent growth target was not realistic and a growth rate of around 2 percent would both be more prudent and likely.
Babacan said Turkey would wrap up 2011 above a 7.5 percent growth rate but might have to slightly revise down its 4 percent growth target for 2012 depending on developments in Europe.
“Growth of 4 percent in 2012 would mean that 2012 would have to be as good a year as 2011, if not better,” said Babacan at the Independent Industrialists’ and Businessmen’s Association (MÜSİAD) meeting at the Rixos Hotel in Ankara yesterday.
Inflation target realistic
The current inflation rate in Turkey was around 10.45 percent, but a 5 percent inflation target was certainly achievable, Babacan said. This high inflation reading was, in his opinion, temporary and not a result of monetary policy but rather developments regarding the exchange rate, rise in electricity prices, an increase in the import tax on various textile products and the rise in cigarette prices, he added.
Babacan also said there was likely to be an improvement in Turkey’s current account deficit and in the past four to five months they had seen substantially more direct investment without a serious outflow of capital from Turkey.
The Turkish Central Bank had sold a large amount of dollars, he said. “The volatility in the lira is less than what you see in other developing countries,” said Babacan, adding that currency devaluation was a problem facing all developing countries and not a phenomenon specific to the Turkish case.
Meanwhile, in evaluating 2011 and spelling out its 2012 expectations, MÜSİAD said Turkey’s growth rate was five times that of the U.S. and Europe and had surpassed other BRIC countries bringing it on par with China. MÜSİAD also praised Turkey’s employment record saying unemployment was equivalent to U.S. figures and less than the current unemployment seen in Europe.
2012 could be choppy year for bourse
ISTANBUL – Reuters
Market analysts are predicting 2012 could be a rough year for the Istanbul Stock Exchange (İMKB) as there is a downward trend and a large degree of volatility in the İMKB 100 index.
They advise investors to buy around the 48,000-50,000 band, according to Reuters. More optimistic analysts, who predict a pick-up in the second half of the year, believe the index could reach the 63,000-65,000 band by the end of 2012. However, they also suggest banking sector profits could feel the pinch while non-banking sector stocks are more likely to see a rise in their profits. In a climate of uncertainty, those institutions encouraging investors to add retail, energy, mining and defense sector stocks to their portfolios, are particularly highlighting stocks in TAV Airports Holding (TAVHL.IS), Halkbank (HALKB.IS) and Tüpraş (TUPRS.IS). In 2011, the İMKB 100 Index lost 22.3 percent value on the basis of Turkish Liras and 37 percent on the basis of U.S. dollars.