Hurriyet Daily News
A combination of political uncertainty and economic fragility in Turkey, as well as unstable circumstances externally, has forced Ankara’s economic targets for the 2016-2018 period to be reduced to a more modest level.
The 2016-2018 version of the Medium Term Program (OVP), which has to be prepared every year by law, was released by the Development Ministry and printed in the Official Gazette. The OVP is an elementary document that determines the basic macroeconomic indicators for the entire public sector and which associates policies with planning, programming and budgeting. Thus, the process of preparing the central administration budget begins with the cabinet accepting the OVP.
Those who drafted the plan have noted “There may be the need for certain updates in this OVP covering the 2016 through 2018 period before the new government to be formed after the Nov. 1 general elections sends the 2016 central administration budget to the parliament.”
Without forgetting this reservation, when the 2016 OVP targets are reviewed, it can be said that there is quite a deviation from the targets set for 2015. Starting with growth, other targets in inflation and unemployment have not been reached, whereas in the current account deficit, there is a “recovery” coming from low growth, which is the only good news.
The new OVP states that the growth target which was set at 4 percent for 2015, will now be 3 percent. Given the fact that the growth in the past quarter was not particularly good, even 3 percent is an optimistic estimate.
The OVP used to define the national income with current prices over the dollar exchange rate and the 2015 target was set at $850 billion. But in the new OVP, instead of the dollar in current prices, the “dollar according to purchase power parity” has been used. This makes it difficult for the target to be met. However, the new OVP is hinting at the national income in dollars, in the ratio of the current account deficit to the national income. According to the OVP, the current account deficit will be $36.7 billion, while its rate to the national income will be 5.2 percent.
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