Finding a coalition that best serves Turkey's economy should be the priority in talks to form the country's next government, said Economy Minister Nihat Zeybekci, whose AK Party finished first in last month's national elections. President and AKP founder Tayyip Erdogan is expected to mandate the party to form a coalition government next week.
In the June 7 ballot the AKP was deprived of a parliamentary majority for the first time since 2002, dashing Erdogan's immediate ambition to imbue his largely symbolic presidency with sweeping executive powers.
Early elections may be on the agenda if the coalition talks fail, and all options could be hampered by differences over domestic and foreign policies and by Erdogan's determination to play a pivotal role in government.
Speaking on Thursday, Zeybekci said the AKP was in principle open to negotiating with any party.
"Our prime minister (Ahmet Davutoglu) will hold coalition talks with all parties without laying out any preconditions. He will want to see which coalition would work best for the Turkish economy," Zeybekci said.
Markets did not like elections, he told a news conference.
"But if a coalition cannot be formed, holding early elections will not hurt the Turkish economy significantly."
Turkey's first-quarter economic growth of 2.3 percent was helped by domestic consumption and growth is expected to be higher in the second quarter, Zeybekci said.
"Domestic demand will be the key factor ...this year. If growth remains below 5 percent, it means that Turkey is not making progress."
The trade deficit fell 22 percent year-on-year to $6.28 billion in June, with both exports and imports declining, the Customs and Trade Ministry said on Thursday.
Zeybekci said he expected exports to increase slightly to $158.5 billion this year from $157.6 billion in 2014. Exports to Iraq, Russia and Ukraine would fall by a $3.6 billion, due to economic and political turmoil in these countries.
Imports in 2015 are expected to reach $216 billion, he said.
The current-account deficit, a major weak spot of the economy, would fall to $38 billion this year, approaching a level of 5 percent of gross domestic product.
Zeybekci said the government will raise taxes on some products, including mobile phones and tablets and electrical and electronic goods, in the coming two months.
The lira was trading at 2.6999 against the dollar by 1122 GMT, easing from Wednesday's 2.6918.
The main BIST 100 share index fell 0.34 percent to 81,406.38. The benchmark 10-year government bond yield was largely unchanged at 9.42 percent.
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