Turkey’s growth tipped to top 5pc this year

Turkey’s economic growth should reach almost 6 percent in the second quarter, locking down an overall 5 percent growth this year.

Despite the forecast being just 4 percent, a rebound in domestic demand and Turkish exports has pushed economic growth higher than expected.

Last year, the Turkish economy grew by 2.9 percent, a dramatic drop from 2015’s 6.1 percent.

The news has come from Turkey’s Science, Industry and Technology Minister Faruk Ozlu, who says the government is aiming for sustainable growth rather than a short-lived spurt. This will only be achievable with structural reforms, he added. A production reform should channel 1.5 billion lira (£323m) into the industries, sending growth upwards of 7 percent, Ozlu said.

Interest rates, currently too high to foster growth within the industrial sector, should fall with reforms, as should unemployment, which is currently at 11 percent. Reforms should send unemployment down to single figures, Ozlu said.

Reforms aim to boost the economy

An 180-day action plan to implement other economic reforms is likely to further boost the country.

Deputy Prime Minister Nurettin Canikli said the reforms will see Turkey see a single-digit inflation by the end of the year. Inflation decreased to 10.90 percent year-on-year to June from 11.70 percent in May, data shows.

“Turkey’s economy must grow continuously in order to increase employment and national income,” Canikli said.

He pointed out that all sectors needed to contribute to Turkish growth. “Banks are valuable as long as they support production in the country.”

President Recept Tayyip Erdogan has asked all his ministers to prepare a 180-day action plan by the end of the year, with the aim of implementing them before 2019’s parliamentary and presidential elections.

Fighting inflation

In a bid to contain inflation, Turkey won’t raise taxes on cigarettes this year, according to Finance Minister Naci Agbal. Usually, cigar

The move is part of a number of measures aimed at easing the rising rate of inflation. The government has also cut taxes in meat and grains, in an attempt to stem rising food prices.

Agbal said the government has been “acting in a very careful manner” in terms of monetary policies to try and limit inflation.

“The hikes in cigarette prices last year had an impact on our 2016 inflation rate and created a base effect for this year. We have decided not hike taxes in such products,” he added.

By not increasing taxes in tobacco products, 60 million liras (£12.9 million) would be added to the budget, Agbal added.