Başçı evaluated the latest developments in the markets at a briefing ahead of Monday's Cabinet meeting in Ankara. The bank governor said Turkey is now able to control its CAD better than in previous years. Underlining that recovery in developed economies is still very weak, Başçı said such measures as monetary expansian pose risks to money inflows to these countries in the short-term.
“Hot money inflows to Turkey started to increase recently and this will be helpful in addressing the CAD,” he opined. Başçı emphasized that measures aimed at increasing savings as well as at minimizing Turkey's dependency on foreign energy resources, such as the government's medium-term economic program (OVP), will help narrow the CAD in the months to follow. Mainly affected by the country's energy imports, Turkey's CAD has increased in the past few months, putting pressure on the government and the central bank.
Underlining that a process of recovery that followed the 2009 global credit crunch in the Turkish economy has continued, Başçı said measures to keep problems at bay have proven helpful. “An upward trend in the current account deficit was brought under control as of the last quarter of 2011. … Inflation is expected to begin to reduce by 2012,” he explained. The central bank expects Turkey's inflation rate to stabilize at 5 percent in 2012. Following a recent increase in inflation mainly attributed to spiking domestic demand and the weakening of the Turkish lira along with increases to the private consumption tax (ÖTV) on certain products, the central bank had to revise its year-end inflation forecast from 6.9 percent to 8.3 percent. The bank reassured markets that short-term revisions will not affect the medium-term inflation outlook as monetary tightening is expected to contain inflationary pressures. |
Source : todayszaman.com
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