Unveiled: economic plan that will transform Turkey
An ambitious government plan to transform the Turkish economy will target growth, inflation, jobs, and per capita income. With targets spread over the next two years, the government is aiming for sustainable, balanced growth, Deputy Prime Minister Mehmet Simsek announced last week.
Growth rate to continue, inflation to fall
Pointing out that Turkey’s growth forecast is 5.5 percent this year, Simsek said he predicted the rate of growth would continue until 2020.
A key concern in Turkey is the current high level of inflation. Fuelled by rising transport costs and increased core prices, inflation hit 10.68 percent in August. This level should fall to 9.5 percent by the year end. Simsek says it will drop to 7 percent next year, and reach a more palatable 5 percent by 2020.
A high income country is born
Turkey’s national income per head should reach $13,000 by the end of 2020, Simsek said. This would push Turkey above the World Bank benchmark for a high income country. This target will be aided by lower unemployment rates - the government target is 9.6 percent in 2019. The current level is 10.8 percent.
Rising taxes to stimulate growth
To stimulate the economy and top up government coffers, taxes are rising on a number of goods. A 40 percent tax rise on personal cars is one of the most significant. Corporate tax rates will also rise from 20 to 22 percent. If you’re lucky enough to win the lottery, you’ll be hit with a tax bill of 20 percent - double what it once was. Cigarette papers and alcohol are also tax targets.
Impact on property prices
Overall, the new goals will have very positive impacts Property Turkey director Cameron Deggin said yesterday. “An increased growth rate is certainly positive news for property investors, so we’re very happy to see the current level of growth is set to continue.”
Deggin pointed out that the increased income levels predicted for the country will drive an already healthy domestic market for property, pushing up property prices and creating demand. “More and more Turks are buying their own homes, especially in outer city areas within commutable distance to work. Same goes for the rental market: as Turks become more prosperous, we’re seeing a greater demand for rental property in these same areas, pushing up rental prices.”