Turkey is likely to revise down its growth target for 2014 to 4 percent from 5, due to an expected slowdown in the U.S. Federal Reserve’s (Fed) stimulus program, tensions in the Middle East, and the risk of higher oil prices, economy officials told Reuters on Sept. 6.

The government’s expectations of growth have been 4 percent this year and 5 percent next, according to the medium-term economic program, but ministers have already talked down the outlook for 2013, saying the economy is instead likely to expand at 3 to 4 percent.

“The Fed tapering of its stimulus program, the lack of sufficient fund flows into Turkey, the possibility of intervention in Syria and the risk of it spreading into the region, developments in Egypt, a rise in oil prices and global economic problems pose significant risks to Turkey’s growth,” a senior economy official told Reuters.

All figures, including inflation to be revised

Economy Minister Zafer Caglayan noted that revisions would be necessary to economic targets last week. “Now we have to make a revision,” he was quoted as saying by Anadolu Agency in Tatarstan. The government now expects growth of 3 to 4 percent in 2013, Caglayan said, adding that he believed this would constitute a good performance.

Last year, the economy grew by 2.2 percent, far lower than the growth rates of recent years.
“All the figures in the medium term plan, including inflation, will be revised,” Caglayan said.

Many analysts say that while Turkey has been strongly affected by global monetary conditions, it has its own underlying weaknesses and notably a large current account deficit. Finance experts are concerned about a possible U.S. intervention in Syria, which shares a 900 km (560 mile) border with Turkey, as it could push oil prices higher in the short term, further increasing Turkey’s imports bill and its gaping current account deficit.

Many risks ahead

The prospect of the Fed gradually reining in its huge program of dollar printing has also hit appetite for emerging markets, with Turkey particularly vulnerable to lower capital flows because of its current account gap.

The Turkish government’s new medium-term program, due to be announced within the next month, may include measures and incentives to support growth, investment and exports, officials indicated, without giving any details.