Risks to Turkish growth should ease after local election -Simsek

by Reuters
Monday, 20 January 2014 10:02 GMT

By Orhan Coskun

ANKARA, Jan 20 (Reuters) - Downside risks to Turkey's economic growth should ease after a local election in March as worries about the fallout of a high-level corruption investigation diminish, Finance Minister Mehmet Simsek said.

Speaking to Reuters at the weekend in comments embargoed until Monday, Simsek said Turkey's current account deficit, its main economic weakness, may narrow this year to below the $55.5 billion foreseen in the government's medium-term programme.

He said the government may consider extending bidding deadlines in ongoing privatisations until after the local election if there was demand for such a move from investors.

"Turkey's fundamentals are solid," Simsek said. "Because of the uncertainties, Turkey seems to be negatively decoupled, but when things calm down a fast normalisation will take place."

The corruption scandal, as well as the U.S. Federal Reserve's plans to cut a stimulus programme that has flooded emerging markets with cheap money, have been hanging over Turkey, with the lira falling to a series of record lows.

Simsek said the graft investigation, which has led to the resignation of three ministers and poses one of the biggest challenges of Prime Minister Tayyip Erdogan's 11-year rule, would have a marginal impact on Turkey's 4 percent growth target for this year.

"There are downside risks to growth but if uncertainty decreases after the (local) election, given global economic developments, those risks will be limited," he said.

(Writing by Seda Sezer; Editing by Nick Tattersall)

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