July 27, 2018 / 10:13 AM / 2 months ago

Turkey considering new stimulus measures as growth seen slowing, officials say

ANKARA, July 27 (Reuters) - President Tayyip Erdogan’s government is considering further stimulus measures to address an expected slowdown in growth in coming quarters, two officials said, a move that could heighten concerns that fiscal policy will be loosened.

The economy expanded at a breakneck 7.4 percent last year, boosted by government stimulus and domestic consumption, although analysts have warned growth was uneven and not sustainable. Erdogan, a self-described “enemy of interest rates”, has pushed banks to lend more to boost private spending.

In the aftermath of a failed coup in 2016, the government boosted the size of the fund that backs loans to companies, to 250 billion lira ($52 billion). It has also introduced measures to increase employment.

“Certain steps may be taken to realise higher growth. This issue is on the agenda,” one of the officials said, without elaborating on what that could entail.

The officials said the steps were being considered given that they now expect a contraction in the third quarter and full-year growth of around 4 percent - falling short of the government’s 5.5 percent target in its medium-term programme.

The officials declined to be identified because of the sensitivity of the issue. (Reporting by Nevzat Devranoglu and Orhan Coskun Writing by Tuvan Gumrukcu; Editing by David Dolan)

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