Turkey’s PM confident on economy

But growth will slow, Erdogan warns

Prime Minister Recep Tayyip Erdogan said Turkey would overcome the current global financial crisis with minimal impact.

ANKARA (AFP) – Prime Minister Recep Tayyip Erdogan said yesterday that Turkey will overcome the global financial turbulence but warned that growth will slow in the emerging market economy.

“No one should doubt that Turkey will overcome the crisis with minimum impact... Turkey is not weak against such volatility, as it used to be,” Erdogan told a news conference here.

Turkish stocks plunged more than 13 percent last week following the bankruptcy of US investment bank Lehman Brothers, before a 12.89 percent rise Friday after a US rescue plan to keep the crisis from deepening.

Erdogan said strict financial discipline and a series of structural reforms undertaken in recent years under a deal with the International Monetary Fund had kept the impact of the turmoil limited.

“At present, the fundamental indicators in Turkey’s banking system are positive... Related agencies are keeping a close eye on liquidity in banks and markets,” he said, adding that the Treasury was keeping a strong reserve of cash to pump funds into the markets if need be.

Erdogan warned that the current crisis would slow the economy this year – as is the case with the US and European economies – but did not give any figures.

“The growth performance will be a little less than the high tempo we have seen in recent years,” he said.

Turkey has been one of the strongest economies in the region in recent years, having grown 9.4 percent in 2004, 8.4 percent in 2005 and 6.9 percent in 2006, but that slowed to 4.6 percent last year.

Official data released earlier this month showed that the economy grew 1.9 percent in the second quarter, slowing sharply from 6.7 percent in the first. The year-end growth target is 5 percent.

Erdogan said high energy and food prices had hit Turkey’s efforts to bring down inflation but predicted a sharp decline once supply-side pressure on prices had eased.