Turkey needs 'deep-rooted, sectoral transformation'

By Diyar Guldogan

ANKARA

Turkey needs "deep-rooted, sectoral transformation" in the economy for sustainable growth, Deputy Prime Minister Mehmet Simsek said on Tuesday.

"A sustainable high growth [rate], comprehensiveness of this growth, and fair income distribution are essential. We need to provide more deep-rooted, sectoral transformation to achieve a sustainable growth of over seven percent, which calls for limiting the side effects i.e. current account gap, inflation," Simsek told Fox TV.

Simsek's remarks came a day after the Turkish Statistical Institute (TurkStat) revealed that the country's economy expanded by 7.4 percent in the first quarter of this year compared with the same period last year.

The three-month gross domestic product (GDP) at current prices climbed to around 792.7 billion Turkish liras (nearly $207.5 billion), according to TurkStat data.

Simsek forecasted growth will be re-balanced after the second half of the year and the domestic demand will ease.

"Turkish economy has grown on domestic demand," he said, adding that created a current account deficit problem.

Turkey's current account deficit hits $5.43 billion in April, marking an increase of $1.7 billion, year-on-year, Turkish Central Bank (CBRT) announced on Monday.

"Our primary priority is to fight against inflation and decreasing current account deficit," Simsek said.

The minister added the inflation stemmed from the loss in the value of the Turkish lira against other currencies and the increase in the oil prices.

The country's annual inflation rate was 12.15 percent in May, up from 10.85 percent in April, according to the TurkStat on June 4.

Simsek said Turkey has a $453.2 billion of gross external debt stock and more than two-thirds of it belong to the private sector and less than one third belongs to the public sector.

"Turkey's foreign debt is 53.3 percent of its gross domestic product (GDP). When we compare this ratio globally, it is not really high," he added.