Turkey sees lower growth, double-digit inflation in next years

FILE PHOTO: Turkish Treasury and Finance Minister Berat Albayrak speaks during a presentation to announce his economic policy in Istanbul, Turkey August 10, 2018. (Reuters)
Updated 20 September 2018
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Turkey sees lower growth, double-digit inflation in next years

  • The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019
  • For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent

ISTANBUL: Turkey, which was last month buffeted by its worst currency crisis in recent years, on Thursday forecast sharply lower growth coupled with persistently high inflation in its new medium-term economic program.
The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019, according to figures unveiled at a presentation in Istanbul by Finance Minister Berat Albayrak.
Inflation, meanwhile, would balloon to 20.8 percent at the end of 2018, moderating only slightly to 15.9 percent in 2019, the figures showed.
For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent and 5.0 percent, respectively, while inflation is seen moderating finally to a single digit 9.8 percent in 2020 and then a year later to 6.0 percent.
Albayrak, who is a son-in-law of President Recep Tayyip Erdogan, said what he termed the “New Economic Programme” would be based on the three principes of “balancing, discipline, and change.”
“Our aim is to write a new success story,” he said.
Greater economic prosperity has been one of the pillars of Erdogan’s popularity in his over 15 years in power, with the country seeing impressive growth rates in consecutive years.
However economists have warned that the all-out push for growth has led to a potentially dangerous overheating, with inflation rampant, the currency account deficit widening and doubts over the health of the banking system.
These fault lines were exposed in August when a diplomatic spat with the United States caused a crash in the value of the lira, sparking fears of a full-blown economic crisis.
Albayrak said that in 2019 projects whose tender had not been carried out would be “suspended” and vowed Turkey would create two million new job opportunities by 2021.
“We will realize a program to totally fight against inflation,” Albayrak said, highlighting food inflation which has particularly worried Turks.
Markets greeted his assessments as realistic but the lira was trading lightly lower against the dollar at 6.2, a loss of 0.8 percent in value on the day.


China summons US ambassador over Huawei arrest

Updated 10 December 2018
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China summons US ambassador over Huawei arrest

BEIJING: China summoned the US ambassador on Sunday to protest the arrest of a top executive from telecom giant Huawei in Canada, as Washington’s top trade negotiator rejected suggestions that the case could affect talks aimed at settling a trade war.
The arrest of Huawei’s chief financial officer Meng Wanzhou has infuriated Beijing, which demanded Washington drop its extradition request, and stoked tensions during the trade war truce between China and the United States.
Meng faces US fraud charges related to alleged sanctions-breaking dealings with Iran.
But with negotiations underway against a “hard deadline” of March 1 to settle the tariff dispute between the world’s two biggest economies, US Trade Representative Robert Lighthizer said he did not expect the arrest to disrupt the talks.
Meng, the daughter of Huawei founder Ren Zhengfei, is in custody awaiting a Canadian court’s decision on bail on Monday.
Vice Foreign Minister Le Yucheng summoned US ambassador Terry Branstad one day after he called in Canadian envoy John McCallum to voice China’s displeasure.
“Le Yucheng pointed out that the US side has seriously violated the legitimate rights and interests of Chinese citizens, and the nature of the violation is extremely bad,” the foreign ministry said in a statement.
“The Chinese side firmly opposes this and strongly urges the United States to attach great importance to China’s solemn and just position,” it said.
China also urged the United States to “take immediate measures to correct wrong practices, and revoke the arrest warrant against the Chinese citizen.”
The statement warned that Beijing would make an unspecified “further response” in light of the US actions.
In a case which shook investors and rattled the markets, Meng was arrested in Vancouver while changing planes on December 1, the same day that US President Donald Trump and Chinese leader Xi Jinping agreed to a truce in their trade battle and gave negotiators three months to find a compromise.
Although Trump last week tweeted that the talks would end after 90 days “unless extended,” Lighthizer said on Sunday that March 1 is a firm deadline.
“When I talked to the president of the United States he’s not talking about going beyond March,” Lighthizer said on CBS’s “Face the Nation.”
“If there is a deal to be gotten, we want to get it in the next 90 days.”
He also said that Meng’s arrest “shouldn’t really have much of an impact” on the talks, although he conceded that the Chinese might see it that way.
“For us, it’s unrelated” to trade policy matters. “It’s criminal justice.”
Separately, White House economic adviser Larry Kudlow denied reports that Trump was “livid” that the arrest of Meng occurred while Trump dined with Xi.
“He didn’t know,” Kudlow told “Fox News Sunday.” “He learned way later.”
The world’s top two economies have exchanged steep tariffs on more than $300 billion in total two-way trade, locking them in a conflict that has begun to eat into profits.
Since taking office, Trump has waged an often-fierce offensive against Chinese trade practices, which he regularly brands as “unfair.”
He sees the US trade deficit with China as a particular sore point, and the imbalance ballooned to a record $35.6 billion in November, official data showed on Saturday.
Analysts say Meng could become a bargaining chip in the negotiations.
In a bail hearing that was adjourned on Friday, Canadian Crown prosecutor John Gibb-Carsley asked for bail to be denied, saying Meng has been accused of “conspiracy to defraud multiple financial institutions.”
He said if convicted, she faces more than 30 years in prison.
The extradition process could take months, even years, if appeals are made in the case.
Canada has a long-standing extradition treaty with the United States, requiring it to cooperate with US Department of Justice requests to hand over suspects.
Prime Minister Justin Trudeau has said politics played no part in the decision to arrest Meng.
Huawei said Friday that it would “continue to follow the bail hearing,” expressing “every confidence that the Canadian and US legal systems will reach the right conclusion.”
Huawei has denied any ties to the Chinese government, but many in Washington and other Western capitals are skeptical and have raised security concerns.
US federal law already bans military and government use of devices made by Huawei and fellow Chinese firm ZTE.
Influential Republican Senator Marco Rubio told “Face the Nation” that he plans to reintroduce legislation that would ban companies like Huawei from doing business in the US because they “pose a threat to our national interests.”