Turkey output-led growth helps slow inflation – adviser
Turkey’s focus on boosting production is helping to pare inflation, showing that price increases have been cost-led, rather than spurred by consumer demand, said Cemil Ertem, senior economic adviser to President Recep Tayyip Erdoğan.
While consumer price inflation slowed more than expected in January, the real success for government policy was the sharp decline in producer price rises, Ertem said in the Milliyet newspaper.
The reduction shows that International Monetary Fund-backed policies of raising interest rates to cope with inflation are not applicable, he said.
Turkish annual CPI slowed to 10.4 percent in January from 11.9 percent the previous month, while producer prices rose 12.1 percent compared with 15.5 percent in December, the state statistics agency announced on Monday.
Government stimulus measures focused on loan support for manufacturers have helped reduce borrowing costs and pushed up capacity utilisation, resulting in less price pressure and more economic growth, Ertem said.
He said Turkish growth is now becoming production and export-driven, rather than being fuelled by domestic demand.
Consequently, Turkey’s current account deficit is not widening at dangerous rates because it is not being driven by consumer demand, rather by demand from manufacturers for goods and materials, Ertem said.
The level of credit card debt is relatively flat and consumer loan growth was negative in January, showing price pressures from the consumer side are under control, he said.