Finance Minister Naci Agbal tells Anadolu Agency Q3 growth rate will be higher
Turkey’s economy will continue to grow in the upcoming quarters of this year as leading indicators are strong, the country’s finance minister said on Friday.
Speaking at Anadolu Agency's Editors' Desk in Ankara, Naci Agbal noted that Turkey's growth rate will be higher in the third quarter of 2017 due to base affects compared to the same period of last year.
Turkey’s economy grew 5.2 percent in the first quarter of this year and 5.1 percent in the second quarter, compared with the same periods of 2016, according to Turkish Statistical Institute (TurkStat).
"The third quarter of 2016 coincides with the defeated coup attempt," Agbal recalled.
The finance minister stated that the acceleration in the growth rate will continue in the fourth quarter as well.
"Leading indicators in production, investment, domestic and foreign demand are quite strong. Exports considerably support growth, along with pleasing developments in tourism," Agbal said.
Recalling credit rating agencies' outlook for Turkish economy after the failed coup attempt, Agbal said agencies such as Standard and Poor's and Fitch expected Turkey to grow by 2-3 percent in 2017.
"However, everybody starts to upgrade Turkey's growth rate for 2017. International institutions mention rates like 4.7 or 5.3 percent," Agbal noted.
"There is confidence in the Turkish economy in the market and it continues increasingly," he added.
Agbal also said the budget deficit in August stood at 874 million Turkish liras (nearly $254.5 million) while the primary surplus was 4.6 billion liras ($1.34 billion).
Agbal said there was a significant increase in investment expenditures in the first eight months of the year, adding he expected a considerable increase in tax revenues, exceeding expectations.
"Turkey's budget is solid. Despite additional spending on defense and security, we manage to maintain a balanced budget," Agbal said.
The minister said he projects the budget deficit to reach around 60 billion Turkish liras ($17.5 billion) at the end of the year.
"If we had not taken measures we would not have caught the rising trend of economic growth. Budget deficit will be two percent of GDP at the end of this year," Agbal said.
Agbal also said that they will limit public expenditure, especially current expenditures, in 2018's budget.
Agbal said the latest unemployment rate was positive compared with the last three years' figures and was coherent with the growth rate of over five percent which Turkey achieved in the first half of the year.
The unemployment rate in Turkey remained at 10.2 percent in June compared to the same month last year, the Turkish Statistical Institute (TurkStat) announced on Friday.
The figures confirm the government's employment campaign has been successful, Agbal stated.
"As of June, we see an upward trend in unemployment when we look at the last three years' unemployment figures. The unemployment figure starts January at the highest level, shows a downward trend until June and it rises again afterwards," the finance minister said.
"The unemployment figure remained the same in June compared with May this time. This is an indicator which verifies economic recovery and it is in parallel with the growth rate in the second quarter of this year," Agbal added.
Agbal said employment had been provided for an extra 1.5 million persons in the month compared with June 2016.
The number of employed persons rose to 28.7 million in June 2017 compared with the same period of the previous year, according to TurkStat.
"This verifies expansion in the economy," Agbal added, pointing out an upward trend in youth unemployment and emphasizing that it should be handled.
Istanbul Finance Center
Turkey is working on a legal regulation to make Istanbul an international finance hub and there are plans to bring a draft law to parliament, Agbal said.
He underlined that a legal framework needed to be prepared to comply with global markets.
The Ministry of Science, Industry and Technology; the Ministry of Justice; the Capital Markets Board of Turkey; the Banking Regulation and Supervision Agency; and the Central Bank are working on the issue under the coordination of the Ministry of Finance upon the instruction of Prime Minister Binali Yildirim, Agbal said.
Making Istanbul a finance center is not possible only with tax regulations, he emphasized.
"The transaction cost derived from tax in financial markets need to be reduced or removed. Money can flow to other global centers rapidly because of tax cost," he explained.
Recalling the necessity of qualified human resources for a global finance center, Agbal said an encouraging regulation had to be made regarding this issue.
"In this context, an infrastructure -- which includes international business and tax law together -- as well as the employment of qualified people, will be formed," Agbal stressed.
Agbal also stated that the processes of license and work permit in capital markets will be simplified to reduce bureaucracy.
Brexit is also an opportunity for Turkey to become an attraction center, Agbal noted.
The regulation regarding Istanbul Finance Center will be on the desk January 2018, he said.
Agbal said that global e-trade companies have to pay tax to Turkey over their revenues gained in the country.
Finance minister noted that they are working on a draft law regarding e-traders.
"A global e-trade firm will be a taxpayer in Turkey is it sell products directly to consumers in the country continuously," Agbal stated.
"Otherwise, we will make it a taxpayer automatically and seize their revenues received in Turkey," he added.