Turkish economy to see 7% expansion in Q1, says finance minister

By Aysu Bicer and Ugur Aslanhan

ANKARA (AA) - The Turkish economy will grow by 7% in the first quarter of the year, the country's treasury and finance minister said on Monday, citing leading indicators.

"The global economy has been going through a difficult time. Turkiye, on the other hand, maintains its strong growth," Nureddin Nebati said in his address to the 65th General Assembly of the Banks Association of Turkiye in Istanbul.

The country's economy expanded by 9.1% yearly in the last quarter of 2021 and 11% for the entire year.

He said industrial output had increased by 10.2% in the first quarter, with exports exceeding $240 billion on an annual basis in April, and employment approaching 30 million as of March.

Noting that the current rise in inflation stems from supply-side cost increases, he said this situation would be temporary.

"We're working on new policies related to supply security. Firms should also take bold steps in their price policies. We don't see the fight against inflation as a one-dimensional problem that only the state can solve," he added.

This year, with the effect of favorable climatic conditions, crop production is expected to increase compared to 2021, said Nebati. "When we consider our turnover stocks, we expect to realize grain production above domestic consumption next year. We believe this will have a positive effect on reducing inflation in food prices."

Turkiye saw a 69.97% annual hike in consumer prices in April, according to the Turkish Statistical Institute, with annual inflation projected to hit 42.8% by the end of 2022 and 12.9% by the end of next year.

- Strong banking sector

The Turkish treasury and finance minister also pointed to the strong structure of the country's banking sector, the resilience of its system to shocks and its key role in the development of economic activities.

"For the first time in history, the sector's asset size has exceeded 10 trillion liras ($610 billion)," he said.

Stating that the asset size to national income ratio stands at 141%, Nebati said loans reached 5.5 trillion liras ($335 billion) and that deposits, the most important source of funding, had reached 6 trillion liras ($336 billion).

Underlining that it is important for the banking sector to direct its resources in the right and productive areas, Nebati said the government is closely monitoring loan growth, with a focus on selective credit to increase production, exports, and investments.

As of May 20, commercial loan growth (adjusted for exchange rate effect) was 26.3% annually, while the growth of consumer loans was 23.6% annually, he said.

"In addition, it is very pleasing that a significant part of the acceleration in commercial loans was realized by private banks," he noted.