ANKARA (Reuters) - Finance Minister Berat Albayrak said on Tuesday that he expected Turkey to post positive growth near its targets in 2019, while acknowledging that the budget deficit-to-GDP ratio will be higher than the government’s previous forecast.
The Middle East’s largest economy contracted annually in the last quarter of 2018 and the first quarter of 2019, in the wake of a currency crisis that saw the lira shed nearly 30% of its value against the dollar last year.
The currency crisis caused inflation to surge to a 15-year high in October and the central bank to hike its policy rate to 24%, putting a brake on economic activity. The central bank slashed the rate last week by 425 basis points.
Albayrak told a news conference in Ankara that the budget deficit-to-GDP ratio will be below 3% this year, despite a slowdown in income. That compares to a previous government forecast of 1.9%.
“When we look at 2019, I can say clearly that we will achieve a level of less than 3%, which is below the Maastricht criteria,” he said, referring to the ceiling for eurozone countries.
The central government budget recorded a deficit of 78.58 billion lira as of end-June, official data showed. The government’s forecast for 2019 year-end deficit is 80.6 billion lira.
Albayrak added that he expects Turkey to post positive growth in 2019, close to its target of 2.3% and that normalization of the economy will be stronger in 2020.
The median estimate in a Reuters poll of more than 40 economists earlier this month showed that Turkey’s economy is expected to contract 1.5% this year as whole. The poll saw growth of 2.4% and 3.4% in 2021.
Reporting by Nevzat Devranoglu; Writing by Ali Kucukgocmen and Ezgi Erkoyun; Editing by Jonathan Spicer and Dominic Evans