Worst is over for Turkish markets: Deputy PM

ANKARA (AA) - The worst is over for Turkey's financial markets and a healthy recovery will be observed in the second half of the year, Deputy PM Nurettin Canikli said Wednesday.

"The period of high volatility [in foreign exchange rates] is over,” Canikli said in an interview aired on private A Haber news network, stressing Turkey’s economy had already hit the bottom and now it was on the path to recovery.

Canikli noted the recovery in domestic demand thanks to recent measures introduced by the government, saying this development was expected to show itself in other economic figures as of July.

"This would reduce unemployment figures while boosting growth. The same is true for the consumer prices index. We wiil see a decline in prices, especially by the second half of the year," he added.

The annual inflation rate has risen for the last four months, going from 7 percent in November to 10.13 percent in February, hitting double digits for the first time in nearly five years.

Canikli’s remarks were in line with what Central Bank Governor Murat Cetinkaya said earlier on Wednesday.

"Pass-through from recent exchange rate developments may lead to upside inflationary pressures in the short term; yet, with the support of the tight monetary stance, inflation is expected to trend downwards by mid-year," Cetinkaya said.

Industrial production figures for January published earlier in the day showed an unexpected strength, up 2.6 percent year on year, supporting officials’ confidence about the health of economy.

"The increase in industrial production data points out that the country started the year with a stronger recovery than recent leading indicators such as PMI [ Purchasing Managers' Index] and confidence indexes showed," said Muammer Komurcuoglu, an economist from IS Investment.

Canikli also commented on a possible rate hike in March from the U.S. Federal Reserve and its negative effects on emerging market currencies, saying a rate hike at FED's next monetary policy meeting was already priced in to a large extent and its effect would be very limited on foreign exchange rates.

“As of now, all expectations with regards to a rate hike in March by the Fed are already priced in.

"If the Fed opts to not to raise rates, this would create a more positive atmosphere in markets. If an increase comes, it would not weigh on economy," he added.