ECONOMY

Erdogan sure on growth targets

ANKARA – Turkey’s Prime Minister Recep Tayyip Erdogan said yesterday his government will maintain fiscal discipline and expects Turkey to reach its economic growth targets for 2006 and 2007 despite the hiking of interest rates. Turkey has a target of 5 percent gross national product (GNP) growth for 2006-2007 but analysts are concerned the central bank’s decision to raise borrowing rates by 400 basis points in the past month to help the lira would hurt growth. «I believe the figures will be reached,» Erdogan told Reuters in an interview. He also rejected concern that elections next year meant his government would loosen fiscal discipline to win votes. Last year economic growth reached 7.6 percent as Turkey emerged out of a deep 2001 financial crisis. «There will be no deviation from the economic program. There’s no concession. There’s no concession on fiscal discipline,» Erdogan said. «We are determined not to overspend.» The lira currency lost up to a quarter of its value since end-April after a surge in inflation, jeopardizing International Monetary Fund-backed targets. General jitters over emerging markets, as the United States, eurozone and Japan tighten monetary policy, have also driven the lira’s slide. Political uncertainty in Turkey and a gaping current account deficit have also added to investor nervousness. «There’s a global (market) fluctuation and with no doubt this global fluctuation has a Turkey dimension. But because Turkey stands on strong economic ground it can overcome it successfully but another wave can occur in the sea. We should always be ready but the captains are good. The ship does not take water and we’re continuing our way,» he said. The central bank raised key borrowing rates by 400 basis points to 17.25 percent and lending rates 600 points to 22.25 percent last month to help shore up the lira and fight inflation, which jumped to a 10.12 percent year-on-year in June, putting a year-end target of 5 percent agreed with the IMF virtually out of reach. Erdogan said the year-end annual inflation rate would be in single digits and he was confident Turkey could reach its inflation target for 2007, which is 4 percent with a margin of error of two percentage points either way. «We reached double-digit inflation (in June year-on-year) but I believe at the end of this year we will have single digits,» Erdogan said. The Turkish central bank set a 5 percent inflation target for 2005 with a margin of error of two percentage points either way. The targets for 2007 and 2008 are 4 percent. The reform-minded government was set to exceed its export target of $73 billion to $79 billion for 2006. «We’re at a very good point in exports. Our target was to achieve $79 billion. It seems that we’re going to exceed it,» Erdogan said.