The Turkish government has revealed details of a $34 billion investment package aimed at creating jobs and reducing the country’s rising deficit, according to Hurriyet Daily News.
The project-based plan will see some 19 companies granted funds to expand their businesses, which it is estimated will directly generate some 35,000 jobs, and indirectly aid in the creation of a further 134,000 positions.
“The $34 billion incentive package includes exemptions from customs tariffs and government support for employee insurance premiums,” Turkish President Recep Tayyip Erdogan said yesterday, adding that the plan will help Turkey reduce its current account deficit.
Included among the companies that will benefit from the investment package are appliance manufacturer Vestel, Turkish Aerospace Industries, medical devices manufacturers Alvimedica and polyester producer SASA.
“We will see the positive impacts of these incentives in the next two or three years,” Economy Minister Nihat Zeybekci said.
Turkey’s deficit is one of the highest in the international G20 group, making it reliant on domestic and foreign investment. Erdogan expressed his desire to cut interest rates in an effort to attract greater financing to the country.
“You have to save the investor from high interest rates so that these investments could be made. When there is investment, there are employment, production and exports,” he argued.
Turkey’s economy has witnessed rapid growth rates in recent years, with current figures surpassing that of China and India, as it ended 2017 with a rate of 7.4 per cent, according to the Turkish Statistical Institute.
However, many have expressed concern that the economy is overheating, as the Turkish lira has been consistently falling to record lows against the US dollar, euro and British pound. The lira is the fourth-worst performer so far this year among more than 20 emerging market currencies.
The Turkish currency has been under pressure since early March after credit agency Moody’s cut Turkey’s rating, due to the country’s widening current account deficit. Investors are also concerned at high inflation rates, which stand at over ten per cent, due to the ongoing Syrian conflict on its borders.
In February, the International Monetary Fund (IMF) issued a public warning about the Turkish economy, calling on the government to rein in spending and reduce inflation. The criticism was ill-received by Ankara, with senior presidential advisor Cemil Ertem calling the requests “failed economic theories” and concluding “We are going to do the exact opposite.”