Banco Bilbao Vizcaya Argentaria : The Turkish government presents plan to balance the economy

The Turkish finance minister, Berat Albayrak, explained that the main goals of the program are to balance the economy, increase fiscal discipline and implement a shift in the economic model toward increasing productivity and exports over the long term.

BBVA Research believes the Turkish government's new economic program is now based on 'more realistic' economic growth and inflation forecasts, particular the growth figures, which are now estimated at 2.3 percent for 2019 and 3.5 percent for 2020. For this year, the government sees growth of 3.8 percent, above BBVA Research's forecast of 3.0%. 'The government has settled on lower but more sustainable growth figures', said BBVA Research's chief economist for Turkey, Álvaro Ortiz Vidal-Abarca.

As BBVA Research explains, the plan looks to correct the main imbalances in the economy, with inflation more in line with market expectations and consistent with the path forecast by the Central Bank of Turkey (20.8 percent para 2018, compared with BBVA Research's forecast of 21.5 percent and 15.9 percent for 2019, which is above BBVA Research's estimate of 14.5 percent). The government is forecasting a rapid correction of the current account deficit (from 4.7 percent of GDP this year to 3.33 percent in 2019) and with an average exchange rate more favorable than expected by BBVA Research.

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