Wires

INSTANT VIEW 2- Turkey revises down growth forecasts for 2012-2013

(Adds quotes)

ISTANBUL, Oct 9 (Reuters) - Turkey's economy is expected togrow 3.2 percent this year, below a previous forecast of 4percent, before growing 4 percent next year, Deputy PrimeMinister Ali Babacan said on Tuesday.

Announcing the government's medium-term programme for2012-2015, Babacan said the government maintained its growthforecast of 5 percent for 2014 and 2015.

COMMENTARY OZGUR ALTUG, ECONOMIST, BGC PARTNERS

"(Inflation) was the biggest deviation in forecasts. Thegovernment revised up its 2012 year-end CPI inflation forecastfrom 5.3 percent to 7.4 percent, which made the central bank's(CBT) quarterly inflation report more interesting. If thecentral bank increases its year-end CPI inflation forecast from6.2 percent above 7.0 percent, it should take additionalmeasures...

"However, the Bank continues to keep its effective fundingrate low at 5.80 percent.

"The 2012 budget deficit to GDP target of the government was1.5 percent and now the government revised it to 2.3 percent.The biggest surprise was for the coming three years. For nextyear, the government was foreseeing a budget deficit to GDPratio of 1.4 percent, but in the new program we see that thegovernment also revised it up to 2.2 percent.

"It appears that budget balances will remain relativelyexpansionary compared to previous forecasts. Considering thethree elections in the next three years, we think that the newforecasts appear more realistic. Besides, they are still belowthe related Maastricht criterion of 3 percent."

TIMOTHY ASH, HEAD OF EM, STANDARD BANK

"Remember that this programme covers the next three yearswhen Turkey faces local, presidential and parliamentaryelections, plus a likely referendum on constitutional reform. Inmy mind, given the backdrop of elections, this looks like aprudent and very credible set of targets, and it sends themessage, that despite all the noise, Erdogan has still sidedwith the trusted technos in the cabinet. If the rating agenciesbuy into this plan, IG status should follow."

GIZEM OZTOK ALTINSAC, ECONOMIST, GARANTI SECURITIES

"A more-than-expected slowdown in growth is resulting with alower current account deficit to GDP forecast...Forecasts for2013 are more cautious...The medium-term economic programme isoffering a consistent macro frame, but we think especially forthe end of 2013 5.3 percent inflation is pretty optimistic."

MARKET REACTION The yield on the benchmark two-year bondfell to 7.64 percent from 7.65 percent before the announcement.

The lira weakened slightly to 1.8143 against thedollar, compared with 1.8119 beforehand.

(Reporting by Seda Sezer; Editing by Nick Tattersall)

((seda.sezer@thomsonreuters.com)(+90 212 350 7051)(ReutersMessaging: seda.sezer@thomsonreuters.com))

Keywords: TURKEY ECONOMY/GROWTH

Related Tags