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.


Shareholders of India’s Jet Airways approve debt-for-equity swap

Updated 23 February 2019
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Shareholders of India’s Jet Airways approve debt-for-equity swap

  • The plan will mean the lenders will have a bigger holding than any other shareholder
  • Currently, Chairman Naresh Goyal owns a 51 percent stake in the company and Abu Dhabi’s Etihad Airways owns 24 percent

MUMBAI: India’s Jet Airways said late on Friday that its shareholders approved a plan to convert existing debt to equity, paving the way for the troubled company’s lenders to infuse funds and nominate directors to its board.
Jet’s board last week approved a plan by lenders, led by State Bank of India, for an equity infusion, debt restructuring and the sale or sale-and-lease-back of aircraft.
The plan will mean the lenders will have a bigger holding than any other shareholder.
Currently, Chairman Naresh Goyal owns a 51 percent stake in the company and Abu Dhabi’s Etihad Airways owns 24 percent.
Jet, which had net debt of 72.99 billion rupees ($1.03 billion) as of end-December, has debt payments looming next month, according to rating agency ICRA. It has been unable to pay pilots’ salaries and has outstanding bills to aircraft lessors.
The company, India’s biggest full-service carrier, is struggling with competition from budget rivals, high oil prices and a weaker rupee. The share price took a beating in 2018, losing nearly 70 percent of its value.
In a regulatory filing, Jet said on Friday that 98 percent of its shareholders voted to increase the share capital to 22 billion rupees ($309.8 million) from 2 billion rupees at a special meeting.
Jet, whose financial woes are set against the backdrop of wider aviation industry problems, has been in the red for four straight quarters.