Ankara- Turkish Deputy Prime Minister Mehmet Simsek announced that Turkey aims to achieve 5% growth in 2018 and 2019 while its inflation rate reached 7.5% for this year.
In his keynote before the Committee on Plan and Budget that discusses the new budget of the country, Simsek expected budget deficit to reach 1.9% of the GDP in 2017.
Turkey’s economic figures for 2016 have appeared negative; the consumption rate dropped by 2% during Q2, unemployment hit 11.3%, and the industrial production decreased by 3.1% during September, which indicates that the country’s economy has remarkably deteriorated in the third quarter for the first time since 2009.
After it had expected growth rate during 2016 to reach 4.5%, the Turkish government reduced its forecasts to 3.23%, while the Organization for Economic Co-operation and Development (OECD) said the growth will not exceed 2.9%.
The government has discussed the adoption of additional fiscal reductions following the disappointing drop in growth rate during Q3, especially after the failed coup attempt that took place in July and the terrorist attacks in the country have strongly damaged the tourism sector.
The report on the country’s performance in October prepared by the union of hotel owners in Turkey revealed that the number of European tourists have dropped in both Antalya and Istanbul. Turkey’s tourism sector has been the most affected by the economic crisis.
The report showed that tourists have remarkably decreased and that reservation rates in hotels dropped by 14% to 52.2% in October compared to 2014.
An official from the hotel sector said that hotels have faced huge losses in 2016 and suffered from major debt problems with banks; many of them were not able to pay wages and rents, which pushed some owners to sell their properties to pay their debts. The official noted the sector has lost around 40% of its labor forces.
On another hand, Turkey’s President Recep Tayyip Erdogan signed a bill to ratify a deal with Russia on Turkish stream gas pipeline after being adopted by the parliament last week.
The implementation of the project is expected to kick off in the beginning of 2017.
Russia and Turkey signed an intergovernmental agreement on the pipeline on October 10 according to which, two strings will carry Russian natural gas to Turkey across the Black Sea. The ratification of the bill came in correspondence with the Turkish Prime Minister Binali Yıldırım’s visit to Moscow, where he stressed in the importance of enhancing economic ties between both countries.
In return, responding to Erdogan’s suggestion to adopt local currencies in transaction between Russia and Turkey, Moscow said that this step is not on its schedule; however, it does not actually mind it.
Erdogan considered the economic crisis in Turkey and the sharp drop in the values of the Turkish Lira a “game”. He called Turkish investors to exchange their gold and foreign currencies with their national Lira and announced that Turkey is close to use its local currency in its trade exchange with Russia, China, and Iran.
In this context, he revealed that costs of the Turkish MP’s and his accompanied delegation trip to Moscow will be paid in Russian Ruble.