ISTANBUL: Finance Minister Mehmet Simsek said Tuesday that Turkey does not need to hike interest rates and downplayed any potential impact on economic growth of a corruption scandal engulfing the government.
Economists and analysts have been warning Turkey may need to raise interest rates to ensure inflation and the country's large current account deficit remain under control.
"But you can fullfil this objective by limiting loan growth," Simsek told CNN-Turk television.
He said Turkish authorities had managed to contain credit growth, one of the main causes of Turkey's trade and investment imbalance, without resorting to rate hikes.
The Turkish government is trying to contain the political fallout from the graft probe that poses the biggest challenge to the 11-year rule of Prime Minister Recep Tayyip Erdogan.
The probe, which has seen dozens of top businessmen and political figures including the sons of three ministers arrested, has sent the lira to record lows and raised concerns whether the emerging market will be able to maintain growth.
Simsek suggested Tuesday the economic impact of the crisis would be limited.
"There could be a slowdown to some extent in the first quarter. But I believe that as uncertainty lessens and the environment calms, growth could still be around 4 percent," Simsek.
The government had targeted 4 percent growth before the crisis erupted last month.
"We are facing a significant challenge in the political arena, but we think this will not go on for a long time," he said.
The Turkish central bank has been selling off its dollar reserves to support the lira, but has so far not raised official interest rates, which would help attract foreign investment but slow economic growth.
Comments
Comments are closed.