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Turkish finance minister urges reforms as jobless climbs

Data showed unemployment hitting a four-year high and the current account deficit widening in Turkey

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Turkey must reform its economy to get back to high growth, Finance Minister Mehmet Simsek said on Wednesday after data showed unemployment hitting a four-year high and the current account deficit widening.

He said Prime Minister Ahmet Davutoglu would announce some reform plans soon.

“Turkey cannot be satisfied with current annual growth of 3-4 percent, we need to get back on the high growth path. Extensive micro reforms are needed for this,” Simsek told a news conference in Ankara.

The government this month cut its growth forecasts to 3.3 percent from 4 percent for this year and to 4 percent from 5 percent for next year.

Energy-dependent Turkey’s main economic weakness is its current account deficit, which leaves it reliant on foreign fund flows.

Data on Wednesday showed the deficit rose to $2.77 billion in August from $2.65 billion in July, although one economist played down the problem.

“We consider the expansion of the current account deficit in August as a one-off event, and expect the rebalancing trend of the external accounts to continue in the upcoming months,” said Deniz Cicek, economist at Finansbank.

Other data showed the unemployment rate rose to 9.8 percent in the three months from June to August, its highest level since October 2010. It was 9.1 percent in the May-July period.

The budget, meanwhile, showed a deficit of 9.2 billion lira ($4 billion) in September.

Turkish assets appeared to brush off the data. The lira firmed to 2.2695 against the dollar by 1005 GMT from 2.2742 late on Tuesday. Istanbul's main share index rose 1.09 percent to 75,499 points, while the benchmark 10-year government bond yield was at 9.19 percent.