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Babacan Dismisses IMF Forecasts for Turkish Growth

Turkey's Deputy Prime Minister Ali Babacan
Turkey's Deputy Prime Minister Ali Babacan. Photographer: Simon Dawson/Bloomberg

Turkey stands by its forecast of 4 percent growth this year, Deputy Prime Minister Ali Babacan said, dismissing International Monetary Fund projections that the economy may barely expand.

The global environment is uncertain and there are major decisions to be taken in developed nations in the next four or five weeks that could change the outlook completely, Babacan said in a televised interview from Davos today. The IMF is “generally more negative” on European growth prospects than other bodies and Turkey sees no need to change its forecasts, he said.

Turkish economic growth may slow to an average of 0.4 percent this year, from 8.3 percent in 2011, according to the report prepared by IMF staff for a meeting of officials from the Group of 20 developed economies in Mexico City on Jan. 19. In the fourth quarter of 2012, the economy may contract 0.2 percent, it said. The projections don’t necessarily reflect the views of the IMF executive board, the report said.

This year will see the Turkish economy “walking, not running,” Babacan said. “We won’t allow the economy to fall into recession.”

The fund’s forecasts stress downside risk and Turkey can “comfortably” achieve the government’s goal of 4 percent growth, central bank Governor Erdem Basci said today in an interview from Davos with BloombergHT television.

The economy may expand between 1 percent and 2 percent this year, IMF Deputy Managing Director Zhu Min said yesterday, according to the CNBC-e news channel.

“Growth in G-20 emerging economies is slowing more than expected,” the IMF report for the G-20 meeting said. Export growth is contracting and the “sharpest declines have been recorded in emerging Europe, reflecting close linkages to the euro area.”

About half of Turkish exports go to Europe.

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