Plummeting oil prices advantageous for Turkey's budget

Turkey, an energy importing country, has been taking advantage of the falling oil prices to shrink its high current account deficit, experts agreed here on Thursday.

Turkey will gain 32.6 million U.S. dollars per day as a result of falling oil prices and it will be able to annually gain 11.9 billion dollars on exchange difference, according to Energy and Natural Resources Minister Taner Yildiz.

Some 18.55 million metric tons of oil were imported in the country in 2013 in order to meet the needs of refineries and 2.09 million metric tons were provided by domestic production.

Brent oil price per barrel dropped to its lowest level of 58.71 dollars since 2009. Specialists said that the figure reflects a 50 percent loss in oil prices in the past six months.

Necip Cakir, dean of Economics and Administrative Sciences Faculty in Bahcesehir University, told Xinhua that the falling oil prices will help Turkey to reduce its current account deficit definitely and it will also have an implication on inflation rate.

The expert agreed that Turkey as an energy importing country with a high current account deficit will enjoy the plummeting oil prices.

Turkey's current account deficit was 45.73 billion U.S. dollars for 2014 in October.

In 2010-2011 Turkey had experienced growth rates as high as 9.2 percent and 8.5 percent but the current account deficit went up to 10 percent, Cakir explained. "This was definitely not sustainable, " he added.

Starting from 2012 Turkey has been trying hard to decrease the current account deficit by decreasing or suppressing demand in the economy, he added. Turkey witnessed 2.2 percent growth rate in 2012.

"In 2015 we expect the growth to be 3.1 percent. The oil prices will help Turkey to reduce the current account deficit definitely, " he said.

However Turkish Statistical Institute earlier in December surprisingly announced 1.7 percent growth in Turkish economy, which is far below the expectations.

Ali Semin, an expert in Istanbul-based Wise Men Center for Strategic Studies, argued that the Turkish government should reflect the falling oil prices to the daily lives of the consumers.

"We have been observing almost 50 percent decreases in the prices; however consumers can only receive 10 percent of reduction, " he said.

The picture in Iraq and Saudi Arabia as oil exporting countries is quite dark as more than 90 percent of their state budgets have been generated by the oil sales, he underlined.

Turkey has also been expecting an implication of the falling oil prices on the inflation rate. "We expect a 0.7- 0.8 percent decline in the inflation due to decrease in the oil prices," Cakir said. Turkey's inflation rate was declared as 9.15 percent for 2014.

But the main worrying factor for its economy would be the collapse of the Russian economy, Turkey's one of the biggest trading partners, they noted.

Expert also agreed that one main factor that will create shock waves in Turkey's economy would be the collapse of the Russian economy.

"Turkey is one of most important trade partners is Russia and Russian economy is getting recession," Cakir explained.

"The growth rate for 2015 in Russia was first announced as 1.2 percent but now they declared that there will be recession and the growth rate will be around minus 0.8 percent," he said.

According to him, Turkey's export to Russia will decrease and its tourism income will also drop.

Trade volume between the two countries has reached 33 billion dollars in 2013. The two countries are trying to increase their trade to 100 billion dollars.

NOT IN PANIC

Turkish Prime Minister Ahmet Davutoglu said on Thursday that his country has taken timely measures, "is not in panic" over Russia spillover.

The government does not expect any negative development on Turkey's economy, the prime minister said at a press conference where he unveiled a new macro-economic program.

"We have full confidence in the Turkish economy's resources. Our foreign exchange reserves and the instruments we have are solid," Davutoglu said.

Davutoglu reaffirmed a commitment on fiscal discipline despite declining oil prices.

Turkish lira hit record lows after the Russian ruble lost 20 percent of its value on Tuesday. Turkey is dependent on Russia's oil and natural gas resources. Enditem