Turkey’s battered local currency might soon receive good news. According to Professor Selcuk Abac, the head of the banking consulting firm, IBAR, the inflation rate for coming months will be much lower than expected, reported the Anatolia news agency.
Abac said that both consumer and wholesale price inflation rates turned low in December — this despite the fact that December was a month in which consumer spending increased because of the Ramadan.
The downward trend for inflation is set to continue in coming months, he said. If the inflation rate stays low despite December’s boom in demand, then it would mean that the inflation rate would be much lower in January," said Abac.
Abac added that the Ankara government's three-year economic stabilization program, backed by the International Monetary Fund (IMF), is setting the stage for an anti-inflation struggle.
Higher bank lending rates will contribute to deflation, he said, adding that last year's mistakes will not be repeated. Then, negative real interest rates lead to massive increases in consumption, which caused inflation to overrun their government targets.
A consumption boom in 2001 can be prevented, Abac stated, because “inflation is of more significance this year than growth rates." ¯ (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
