ECONOMY

In Brief

Turkey sustains double-digit growth ISTANBUL (Reuters) – Turkey’s economy grew at a stronger-than-expected 10.3 percent year-on-year in the second quarter, sustaining a robust recovery that looks set to bolster the case for official interest rate rises next year. Yesterday’s data, showing quarterly growth of 3.7 percent, cemented Turkey’s leading position among recovering emerging economies, as it rebounds from a contraction of nearly 5 percent last year. This gave some initial support to local stock and currency markets but the boost was short-lived. Some analysts said they would revise their growth forecasts upward in the light of the figures, and Industry Minister Nihat Ergun said the economy could expand 7 percent over the year as a whole. No immediate impact on monetary policy was expected. Gross domestic product growth compared with a year-on-year forecast of 9 percent in a Reuters poll of 19 economists. The economy shrank 7.7 percent in the second quarter last year. «A remarkable number for Turkey, putting it at the top of the regional growth/recovery stakes,» RBS economist Timothy Ash said in a flash note to clients. «This suggests that the Turkish economy will grow at twice the pace of the likes of the market’s darling Poland and even Russia.» The data provided a further boost for the ruling Justice and Development Party, seeking a third term in office in a parliamentary election due by July 2011, after Turks approved the constitutional reforms it sought in Sunday’s referendum. However, «market reaction both to the government victory in the constitutional reform poll and the second-quarter national accounts series has been remarkably muted – suggesting that these positives were mostly priced in,» Ash added. Bulgaria January-July c/a deficit shrinks SOFIA (Reuters) – Bulgaria’s current account deficit shrank to 0.8 percent of annual gross domestic product between January and July, from 7.3 percent in the same period a year ago, due to weak demand and a pickup in exports, central bank data showed yesterday. In July alone, the Balkan country posted a current account surplus for a second month in a row, of 529.5 million euros. The government forecasts a current account deficit of 3.2 percent of gross domestic product for this year, down from 9.4 percent of GDP in 2009. The deficit narrowed to 278 million euros in the first seven months of the year, down from 2.57 billion in the same period a year ago, as exports rose 30 percent and imports increased 6 percent. Bosnia budget The parliament of Bosnia’s Muslim-Croat federation passed a rebalanced 2010 budget yesterday, meeting a key condition for a new injection of funds from a 1.2-billion-euro International Monetary Fund loan. The budget grew by 116 million Bosnian marka ($76.3 million) to 1.86 billion marka because of the rise of revenues from taxes and state company dividends, Finance Minister Vjekoslav Bevanda said. «In agreement with the IMF, the rebalanced budget includes an increase in outstanding transfers for pensions and disability payments but also cuts in public sector wages and benefits,» Bevanda told state radio. «That will help us preserve financial stability until the end of the year.» The rebalanced budget also includes funds from the World Bank and the European Commission that are contingent upon IMF approval and without which Bosnia’s two regions, the Serb Republic and the federation, would risk serious deficit problems. (Reuters) Turk banks Several Turkish banks with close ties to the European Union and the United States have halted financial trade with Iran due to United Nations sanctions, though others could step in, according to Iran’s Bank Mellat. Younes Hormozi, chairman of Bank Mellat’s Turkish unit, told Reuters that Bank Mellat Turkey had dealt with a higher number of transactions since Turkish banks halted activities. He said his bank had approached new potential banking partners in Turkey, but had still to hear their response. (Reuters)