ECONOMY

Turkish inflation expectations close to IMF-set target

ISTANBUL (Reuters) – Central bank chief Sureyya Serdengecti said yesterday 2002 inflation expectations in crisis-hit Turkey were falling swiftly in line with key targets amid Ankara’s efforts to implement a $16-billion International Monetary Fund (IMF) pact. A bi-weekly central bank survey published yesterday showed expectations for consumer price inflation (CPI) had fallen to 34.5 percent from a previous 36.7 percent, the first time the survey had shown a forecast for year-end CPI below the government’s 35-percent target. The government is also aiming for growth of 3 percent this year after a financial crisis in February 2001 brought economic contraction of 9.4 percent, halved the value of the lira and put more than a million people out of work. The central bank report was published as Turkey’s Cabinet met yesterday for the first time since late April amid fears that the ongoing illness of Prime Minister Bulent Ecevit might leave a power vacuum undermining economic reform. Serdengecti briefed ministers at the meeting, headed by nationalist Deputy Prime Minister Devlet Bahceli. Government spokesman Sukru Sina Gurel later told reporters the government would meet price and growth targets under its IMF program. The greatest threat to Turkey’s inflation policy came from petrol prices and the public sector, which looked to past price trends when setting future prices, Serdengecti said. He also predicted $7.2 billion in capital inflows during 2002. Capital inflow reached $12.9 billion in 2000 but last year’s crisis sparked a net capital outflow of $3.9 billion in 2001. «While Europe’s economy is based on telecoms to a much greater degree than America’s, the governments of the 15 member states did absolutely nothing to protect their economies from the coming slowdown,» he said, to make the point that Europe follows rather than leads in formulating the dominant trends. «And so, Europe expects recovery once again from America.»