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Fed’s effect ‘more serious’ than Gezi, Turkish Minister says

The ramifications of the U.S. Federal Reserve’s announcement will be much more severe on the Turkish economy than the Gezi Park incidents, Turkish Finance Minister Mehmet Şimşek said, adding that the government currently did not see any need for an update to its year-end targets and forecasts.

Şimşek stated that it was necessary to separate the Fed’s latest decisions from the Gezi Park incidents as “different subjects” in order to understand the current situation better. “Probably, the reflections of the Gezi incidents will be quite limited, but the Fed’s announcement on possible changes in monetary policies will reflect on the global economy more seriously,” Şimşek said in a press meeting.

He noted that they currently did not foresee any revision to budget targets or the growth rate target. “We will review the Medium Term Program by the end of the summer. All effects will be evaluated then, but we don’t see any changes in targets or predictions for now,” he said.

Şimşek stressed that Turkey had a solid macroeconomics basis, despite its current account deficit problem.

However, Şimşek said they had held teleconferences with international investors at the beginning of the Gezi Park incidents. “It is clear that it affected negatively Turkey’s reputation and perceptions of investment and credibility, but the truths have been revealed. The investors are coming to Turkey and seeing that the real situation is not as they think. I believe that the perception will be corrected and a permanent damage will not happen in the economy,” he said.

Meanwhile, after a question about the correlation between Turkey’s economic performance and non-opened European Union chapters, Şimşek said it was difficult to establish a bond between two issues. “Even though no chapter was opened for the last three years, the Turkish economy overcame the global crisis and received investable grade from the credit rating agencies,” he said. But he noted that the EU was important for Turkey’s democratic standards amelioration, its corporate infrastructure improvement and its trade, adding that Turkey needed Europe as much as Europe needs Turkey “because Europe will lose ground in the global economy without Turkey.”