Turkish Finance Minister Mehmet Simsek said on Wednesday that downside risks on government's growth target of 4% for 2014 have recently increased. Simsek also said that demand for foreign currencies, which had recently increased, may reverse after local elections, which will be held at the end of March, as political uncertainties disappear. Turkish government forecasts a GDP growth rate of 4% for 2014 which is seen too optimistic given the turmoil in emerging markets and measures taken by local authorities to curb domestic demand. The Central Bank's regular survey found out last month that the Turkish economy is expected to grow 3.2% this year, lower than the 3.7% growth estimate in the previous survey. The Central Bank aggressively raised interest rates in an attempt to halt the depreciation of TRY but it did not help. The on-going political turmoil also puts additional pressure on TRY. TRY depreciated by a further 6% against USD to 2.2560 as of February 4 from 2.1304 at end-2013. Last month, the EBRD cut the 2014 GDP growth forecast for Turkey to 3.3% from a previous 3.6%, citing monetary tightening and the increase in financing costs linked to higher political risks. The World Bank and IMF both expect the Turkish economy to expand 3.5% this year.
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