Turkey to forecast 4.6-5 pct GDP fall in 2009 - sources

Turkey's economy posted growth rates averaging 5.9 percent in 2002-2008 but the global crisis has sapped demand for its key textiles, automotive and electronics products this year.

The International Monetary Fund, which has been in talks with Ankara on a major loan deal, expects Turkey's economy to shrink 5.1 percent in 2009.

"This year's contraction is seen in a range of 4.6-5 percent according to existing data but if oil prices rise, this will of course have an impact," said one senior government source.

Another source confirmed the government was likely to revise the forecast to -4.6-5.0 percent and said the figure would be higher if oil prices continued to rise. Turkey is a net oil importer.

Turkey's economy contracted 6.2 percent in the final quarter of 2008, showing its worst performance since 2001's domestic financial crisis.

Analysts expect Turkish GDP to fall in double digits of percent year-on-year in the first quarter. The Turkish Statistics Institute will announce first quarter GDP data on June 30.

Deputy prime minister in charge of the economy Ali Babacan said this week that the economy may shrink by more than a previously expected 3.6 percent this year as the world economy slows, but would return to "significant growth" in 2010.

Falling growth has sent Turkey's unemployment rate to a historic high of 16.1 percent and forced the government to take stimulus measures including tax cuts and creation of thousands of public sector jobs.

Economists welcomed the range of 4.6-5 percent as a more realistic GDP estimate, but said the government should also revise 2009 budget forecasts.

The official budget deficit estimate for 2009 is 48.3 billion lira ($31.2 billion).

"Revising the growth estimate is not enough. (Lower growth) means an even higher budget deficit. That means a larger budget deficit should be expected," AK Investment chief economist Hakan Aklar said.

Turkey's budget deficit soared 268 percent year-on-year in the first four months of the year, endangering end-year targets. A rising budget deficit means higher borrowing from the domestic credit market and rising risk premiums for Turkish debt.