Govt to share new economic road map in March, GDP data due next week
The data next week is expected to show that the economy has emerged as one of the few in the world to have avoided a contraction in 2020 amid the pandemic, before the government unveils details of the new economic reforms a week later
TURKEY will unveil details of its new economic reform policies in the second week of March, the treasury and finance minister said, while data next week is expected to show that the Turkish economy was among the few that ended the coronavirus pandemicravaged 2020 with growth.
“We have come to the end of our economic reform work, which includes macroeconomic stability policies and structural policies,” Treasury and Finance Minister Lütfi Elvan said on Twitter on Thursday. Elvan stressed that 2021 would be a year of reforms for Turkey. President Recep Tayyip Erdoğan late last year pledged a new economic era and promised a slate of economic and judicial reforms, which he said would raise the standards for democratic rights and freedom. He on Wednesday said a human rights action plan would be announced next week. Economic reforms are expected to focus on investment, production, exports and employment.
“I hope we will reveal our determination to grow our country once again by announcing our economic reform package,” the president noted. Top Turkish officials have held negotiations on the reforms with key business leaders over recent months.
TREASURY and Finance Minister Elvan had said Turkey would maintain fiscal discipline and would focus on sustainable and “high quality” economic growth policies in the coming period to increase employment.
2.3% GDP GROWTH IN 2020
Turkey’s economy is expected to have grown at a hot 7.1% pace in the fourth quarter and to have logged 2.3% growth in 2020 as a whole, emerging as one of the few countries to avoid a contraction amid the pandemic, a poll showed on Wednesday.
The Turkish Statistical Institute (TurkStat) is expected to announce fourth-quarter gross domestic product (GDP) data at 7 a.m. GMT on March 1.
The major emerging market (EM) economy expanded 4.5% year-on-year in the first quarter when social and business curbs were imposed, leading to a 9.9% contraction in the second. It rebounded 6.7% in the third quarter as state banks offered cheap credit and as restrictions were lifted.
The median forecast in a Reuters poll of 16 economists for the October December quarter was for 7.1% yearon-year growth with estimates ranging between 3% and 8.3%. The median estimate of 2.3% for 2020 was based on 19 respondents.
Last year the government had forecast GDP growth of 0.3%. For 2021, the GDP is estimated to grow by 4.5% as the economy continues to rebound, according to the median estimate of 11 economists in the Reuters poll.
A number of international financial institutions have recently revised upward their growth forecasts for the economy for both 2020 and 2021.
These included the International Monetary Fund (IMF), Wall Street banks JP Morgan and Goldman Sachs, Bank of America (BofA), British banking giant HSBC and Moody’s.
In a list of selected large economies, the IMF forecasted expansions in only Turkey, China and Egypt in 2020 due to pandemic fallout, based on its January World Economic Outlook Update.
It said the country’s GDP was expected to have ended 2020 with a growth of 1.2%, up from its previous forecast of negative 5%. It sees the economy growing 6% this year, compared with a previous projection of 5%.
JP Morgan hiked its 2020 view to 1.9% from 1.1%, while it raised the forecast for 2021 to 4.6%, from 3.3% previously.
Goldman raised this year’s expectation to 6% growth from 4%. Moody’s on Wednesday revised its forecast to 1.1% for 2020 from a 5% contraction and to 3.5% for 2021 from 4%.
HSBC expects the country’s GDP to have grown 2% in the whole of 2020, up from its previous forecast of 1%. It sees the economy expanding by 4.2% this year, up from 2.1%.
BofA sees the economy growing by 2.2% in 2020, up from 1% previously, due to strong demand in the final quarter. It raised its 2021 growth forecast to 4.6% from 4.1% previously.
“After historically high credit growth last year to fight the pandemic’s effect on the economy, credit growth is now negative (and the) focus has shifted from growth to price stability in November,” BofA said in a client note.
Faced with a second COVID-19 wave, the government imposed new measures at the end of last year but sought to free up supply and production chains. Ankara is considering lifting some restrictions as of March.
Seen as a precursor to growth figures, industrial production expanded 10.1% year-on-year in the fourth quarter.
“Indicators still show growing demand for manufacturing despite COVID-19 restrictions,” BofA added.
Although the new economy management “is keen on slowing domestic demand to help bring down inflation, pent-up demand and opening of the services sector can put more pressure on inflation.”
Since taking office in November, the new Central Bank of the Republic of Turkey Governor Naci Ağbal has raised the one-week repo rate by 675 basis points to pull the Turkish lira up from a record low and to address inflation.
The bank last week left its benchmark interest rate unchanged at 17% as expected, holding steady for a second month after the two sharp hikes that were meant to cool the price increases.
The bank has maintained its hawkish tone, promising tighter policy if needed to rein in inflation, which edged higher to nearly 15% in January.
THE 5+1 informal U.N.-led meeting expected to be held between April 27-29 aims to determine whether common ground can be found between the two sides in order to restart negotiations, Turkish Cypriot Foreign Minister Tahsin Ertuğruloğlu said yesterday.
Ertuğruloğlu told Anadolu Agency (AA) that the TRNC welcomes the meeting, noting that the event was planned based on Turkey’s suggestion. “The goal of the 5+1 meeting is to determine whether there is a common ground for negotiations between the two sides. The 5+1 meeting should not and will not be the continuation of the Crans Montana talks, which ended in 2017,” Ertuğruloğlu said, adding that they should not dwell on the five decades of unsuccessful talks during the meeting, and reiterated that it is not the start of the negotiation process.
The foreign minister expressed that the sides will not have enough time in a single meeting to ascertain whether they have common goals and that several more meetings will need to take place over an extended period of time to come to a concrete solution.
United Nations Secretary-General Antonio
Guterres plans to hold an informal meeting to discuss ways to restart deadlocked peace talks on the divided island of Cyprus involving Turkish and Greek Cypriots and the three guarantor countries, including Turkey, Greece and the U.K. in April, his spokesman said Wednesday.
“Following the consultations conducted on behalf of the Secretary-General by a senior U.N. official, Ms. Jane Holl Lute, over the past several months, the Secretary-General intends to convene an informal five-plus-one meeting on the Cyprus issue in Geneva, Switzerland, from 27 to 29 April 2021,” said Stephane Dujarric in a statement.
Turkey, Greece and the U.K. act as guarantors of the island’s sovereignty under the treaty that gave Cyprus independence from British rule in 1960. There have been no official U.N.-sponsored negotiations on the island’s future since a conference in Switzerland – also involving Greece, Turkey and Britain – collapsed in 2017.
Obstacles to the peace process include
rising tensions in the eastern Mediterranean over conflicting claims to offshore oil and gas.
The island of Cyprus, with a combined population of just over 1 million, has been divided since 1974 when a Greek Cypriot coup aimed at Greece’s annexation of the island was followed by violence against the island’s Turks and Ankara’s intervention as a guarantor power. It has seen an on-and-off peace process in recent years, including a failed 2017 initiative in Switzerland under the auspices of guarantor countries Turkey, Greece and the U.K. The Turkish Republic of Northern Cyprus (TRNC) was founded in 1983.
Currently, the TRNC has a population of almost 400,000 people. Even though it is not recognized by any country other than Turkey, it is a model state in terms of its democracy and freedom. A 2016 Freedom House report on the country stated it is “free” when it comes to political rights and civil liberties.
The TRNC seeks a resolution that would allow coexistence for two sovereign
states on the island of Cyprus, TRNC President Ersin Tatar said.
In November, rival Cypriot leaders held a “break-the-ice” meeting at which they promised to back a U.N.-led peace push involving the outside powers.
It was their first and only meeting since the Ankara-backed Tatar was elected leader of the Turkish north in October.
Tatar was elected on a platform of seeking a two-state solution for Cyprus, rather than a bi-communal federation.
The two men have acknowledged their positions on the way forward are “far apart.”
“We do not accept the presence of a European Union (EU) representative at the table during the meeting,” Ertuğruloğlu said, adding that they could be in Geneva and hold bilateral meetings with the sides.
Regarding Lute, Ertuğruloğlu said she is well aware of the TRNC’s stance and respects it.
The Turkish Cypriot foreign minister also said they do not consider it the end of the world if the talks do not produce results. “The only option of the Turkish Cypriot people is not to co-share with the Greek Cypriots. We have seen what happened when we did in the past and are still living it. We need to move with knowing that we have other options besides agreeing with the Greek Cypriots,” Ertuğruloğlu said, and added: “Nobody can see us as a people who are doomed to the Greek Cypriots.”
The foreign minister also highlighted the importance of Turkey’s stance on the issue, describing the Cyprus issue as a national matter that the Turkish Cypriots will decide how to handle with Turkey.
“We move forward with this awareness and confidence,” he added.