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concluding that when it comes to local financial markets “the current calm appears fragile”. With Turkey again set to rely on a credit-fuelled drive for growth, “prospects for strong, sustainable, medium-term growth look challenging without further reforms”, the Fund asserted.
But blithe or not, Albayrak trotted out his latest economic targets. According to the new economic programme, Turkey will grow 0.5% y/y in 2019, down from the 3.5% predicted in the previous programme covering 2019-2021 released last September, but “beating all doubters expecting a contraction again”, Albayrak said, repeating a favourite line. In 2020, he said Turkey was set to grow by 5% y/y, as Erdogan recently outlined, up from the 3.5% foreseen in the previous programme.
The latest programme also anticipates that consumer price index (CPI) annual inflation will be down to 12% at end-2019, a significantly better figure than the 16.3% given in the previous programme.
The latest official data suggests that CPI inflation fell to 15.01% in August. It will fall into the single digits in September and October due to the base affect from last year when it was sent soaring by the balance of payments crisis.
Other new projections include a current account surplus of 0.1% of GDP in 2019 (previous programme saw a deficit of 3.3% of GDP), turning to a modest deficit of 1.2% of GDP in 2020 (previous programme 2.7%).
These amount to another set of impressive figures. But as the consulting firms hired by Albayrak should have told him, the outlook doesn’t really add up. Albayrak may have stated that his new buzzword is “change”, following “rebalancing” which he settled on for this year, But if you find yourself up stinky creek, you’d better be honest about the merits of your paddle.
“KEEP CALM, KEEP CALM”
Another adjustment in the programme is a central government budget deficit of 2.9% of GDP in 2019 and 2020 (versus 1.8% of GDP in 2019 and 1.9% in 2020 previously).
Calculations based on lira and USD-denominated GDP figures, meanwhile, show the USD/TRY rate rising to 6.0000 in 2020 (6.0023 in the previous program) from 5.6996 in 2019 (previously 5.5975).
Obviously, there are ‘Erdoganomics’ at work here, and, who knows, there will be a day on which orthodox economists everywhere will be required to eat a mountain of humble pie as all that the president and his officials have foretold comes to pass. The TRY was up around 0.4% against the dollar as the markets digested Albayrak’s latest plan, released on the closing day for Q3 financials.
The finance minister’s presentation followed a mystifying sudden inflow into
22 TURKEY Country Report October 2019 www.intellinews.com