ANKARA, Sept. 30 (Xinhua) — The Turkish government has unveiled a new economic program between 2018 and 2020 in a bid to reach balanced and sustainable growth, said local experts on Saturday.
The program included a series of targets in growth, inflation, and national income per capita, but comprehensive structural transformation is required to reach balanced and sustainable growth, experts said.
According to the mid-term program, the G20 member Turkey foresees economic growth of 5.5 percent and inflation of 9.5 percent this year, while economic growth is expected to be at 5.5 percent between 2018 and 2020.
Inflation is expected to fall to 7 percent next year and to 5 percent by 2020.
Turkey’s national income per capita will “probably hit 13,000 U.S. dollars” by the end of 2020, according to the report. The government forecasted also an unemployment rate of 10.5 percent in 2018, 9.9 percent in 2019 and 9.6 percent in 2020.
Ankara aimed to lower the current account deficit-to-GDP ratio to below 4 percent by the end of 2020.
Elaborating on the growth data, Turkish Deputy Prime Minister Mehmet Simsek stressed the government “aims for more balanced, sustainable and inclusive growth in the upcoming period.”
However, experts have remained cautious on the impact of these objectives, arguing that the targets would be “quite challenging.”
“The targets on inflation and growth are rather ambitious with the data that we have actually,” Enver Erkan, analyst from Istanbul-based KapitalFX company, told Xinhua.
“Considering the high inflation of food products we have today, I think that the overall inflation target is rather challenging,” he said.
Data showed that Turkey’s annual inflation rose more than expected at 10.6 percent in August, fueled by rising transport and core prices.
Along with the new economic program, the government also announced a dramatic hike in taxes that analysts predicted as a preparation of the ruling Justice and Development party (AKP) for 2019, when crucial legislative and presidential elections will be held.
Next taxes introduced by the AKP government for 2018 aim to add some 8 billion U.S. dollars to the revenue budget. It includes a 40 percent rise in personal cars, in line with the new economic program.
Corporate taxes in the financial sector will rise from 20 to 22 percent. The hike also concerns lottery fees, energy drinks, communication and cigarette papers.
“These taxes will make the middle class suffer. There are taxes imposed on nearly every consumer goods,” pointed out Enver Erkan.
Considering that more than 100,000 people were dismissed from the civil service, tens of thousands of private businesses were confiscated by the government after the coup attempt.
Analyst predicted a struggling economy, but things proved more successful than expected with a robust growth of 5.1 percent in the second quarter of 2017.
“The tax increases will definitely be positive for fiscal balances, but they will be slightly negative for the fight against inflation and might be negative for consumption and growth,'” said Altug Ozgur, BGC Partners chief economist.
He warned that “the program foresees a rosy global economic outlook for the next three years, which might not be the case,” pointing out that the tax increases should have an egotism impact on consumption.
“Turkey reaped the benefits of the reforms it undertook in 2000 for ten years and with the help of the global climate, it reached high growth rates,” noted Eedal Saglam, the columnist of Hurriyet daily.
The government also attaches the importance of economic reform to realize sustainable and inclusive growth.
“Strong economic growth was not enough,” Simsek said, adding “we need to realize our comprehensive reform agenda in the forthcoming period in order to enhance this performance and speed up the structural transformation of our economy.”