{"id":1693,"date":"2018-09-25T17:33:01","date_gmt":"2018-09-25T17:33:01","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=1693"},"modified":"2018-09-25T17:33:01","modified_gmt":"2018-09-25T17:33:01","slug":"turkey-slashes-growth-forecasts-to-boost-investor-confidence","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=1693","title":{"rendered":"Turkey slashes growth forecasts to boost investor confidence"},"content":{"rendered":"
\n

Reuters Ankara<\/p>\n<\/div>\n

Turkey sharply cut its growth forecasts for this year and next yesterday, but disappointed investors who had hoped for a plan to help banks and a deeper reduction in the estimates to reflect the fragile state of the economy.
\nTurkey has seen its lira currency plunge by 40% this year on concerns about political influence over monetary policy and a bitter diplomatic rift with the US.
\nThe turbulence has shaken global financial markets and raised the prospect of a potential banking crisis at home.
\nMarkets had been hoping that Finance Minister Berat Albayrak\u2019s medium-term programme announced yesterday would signal a clear break from the emphasis on credit-fuelled growth that has characterised Turkey\u2019s rapid expansion over the last decade and a half.
\nAlbayrak said growth would be 3.8% this year and 2.3% in 2019, both revised down from forecasts of 5.5%.
\nHe also did not deliver the big plans for the banking industry that some analysts had been hoping for, particularly, the creation of a \u201cbad bank\u201d vehicle to take over non-performing loans.
\nFollowing the presentation, the chairman of Turkey\u2019s BDDK banking watchdog said there would not be a transfer of problem loans to another institution.
\n\u201cAt the moment, the programme is a disappointment. First, when you look at the growth forecast, the current account deficit forecast, they are too ambitious,\u201d said Guillaume Tresca, a senior EM strategist at Credit Agricole. \u201cWe don\u2019t have anything new, regarding a bad bank, regarding the treatment of (non-performing loans), regarding the foreign-exchange funding of the banking system or the foreign-exchange funding of the corporates. It is lacking details and it is lacking news.\u201d
\nThe lira weakened to 6.3100 by 1219 GMT, from around 6.20 beforehand and a close of 6.2541 on Wednesday.
\nThe currency has now erased almost all the gains made since the central bank\u2019s mammoth interest rate hike of 6.25 percentage points last week, underscoring the difficulty policymakers face in putting a floor under the lira and restoring confidence.
\nSources told Reuters on Wednesday there was a debate among top government officials about the extent of the growth revisions, highlighting the delicate balance between the long-standing drive for economic expansion and investors\u2019 calls for greater austerity.
\nAlbayrak, President Recep Tayyip Erdogan\u2019s son-in-law, had previously promised \u201crealistic macro targets\u201d and \u201cright action plans\u201d.
\n\u201cWe will see a gradual growth increase from now on. Our main goal is to establish 5% growth from 2021 onwards,\u201d Albayrak told yesterday\u2019s presentation in Istanbul.
\nHe did not take questions.
\n\u201cWe will realise the necessary policies and measures to ensure economic hardships are overcome,\u201d he said. \u201cWe are aware of the economy\u2019s strong and weak points.\u201d
\nFor financial markets, the biggest concerns remain inflation \u2014 which Albayrak forecast would hit 20.8% this year and 15.9% next year \u2014 and the banking sector.
\nTurkey\u2019s banks face a potential deluge of bad debt as the lira sell-off has driven up the cost for companies to service their foreign currency loans.
\nFor years Turkish firms borrowed in dollars and euros, drawn by lower interest rates.
\nJPMorgan estimates that the private sector has around $146bn in external debt maturing in the year to July 2019.
\nRatings agencies Moody\u2019s and Fitch have both sounded the alarm about the outlook for banks.
\nFitch has estimated that banks\u2019 foreign-currency lending stood at around 43% of all loans.
\nBut the government has repeatedly said it does not expect problems in the banking sector.<\/p>\n","protected":false},"excerpt":{"rendered":"

Reuters Ankara Turkey sharply cut its growth forecasts for this year and next yesterday, but disappointed investors who had hoped for a plan to help banks and a deeper reduction in the…<\/p>\n","protected":false},"author":1,"featured_media":1711,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[46,57,90,96,107,137,139,160,174,184,201,202,209,232,233,244,246,249,256,267,277,279,288],"class_list":["post-1693","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aramco","tag-baroudi","tag-democracy","tag-doha","tag-embargo","tag-gas","tag-gazprom","tag-international-maritime-disputes","tag-lebanon","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1693","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1693"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1693\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/1711"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}