Babacan: "While our growth target is a cautious 6.8 pct, the markets are eyeing 8 pct"

Turkey's 6.8 percent target growth rate in its medium-term economic program is a cautious one, and market expectations are more optimistic, at around 8 percent, said Economy Minister Ali Babacan yesterday. He told reporters that Turkey is one of the few countries in the world with both high growth and quickly falling unemployment. State Ministers Zafer Caglayan and Cevdet Yılmaz, Finance Minister Mehmet Simsek, Industry and Trade Minister Nihat Ergun, and Labor and Social Security Minister Omer Dincer also attended the press conference where Babacan spoke. Babacan said the program sets targets to move forward by supporting consistent growth, boosting employment, improving public balances, keeping prices stable, and implementing structural reforms. "Last year I also announced the growth rate with caution," he added. "Just like in 2009, I'd like to avoid any negative surprises. It could turn out to be a positive surprise." On the global economy, Babacan said this year will end up being one of recovery. Turkey's program anticipates unemployment of 12.2 percent by year's-end, he said, and "modest drops starting next year." Turkey's success in creating jobs and lowering unemployment will set it apart from other countries, he said. "Of course, active employment policies are especially significant in this context," he explained. "Unfortunately, rigidities in the labor market are our biggest problem. Obviously we have to take some structural measures on labor market flexibility and this, of course, requires working on the largest common ground possible through negotiations with the parties involved," he said. Babacan said global energy price fluctuations will definitely affect these numbers. He also said the deficit will not exceed what Turkey can endure.