(Updates with details, background)
By Sujata Rao and Sebastian Tong
LONDON, Nov 23 (Reuters) - Turkey will find it hard to sustain its current pace of economic growth in the near term, Finance Minister Mehmet Simsek said on Tuesday, adding the government would stick to its 2010 growth forecast of 6.8 percent.
The Turkish economy grew at a blistering pace of 11.7 percent year-on-year in the first quarter, followed by 10.3 percent in the second quarter but Simsek said the government is not banking on a similar pace in the second half of 2010.
"Growth is likely to be sustained, of course not at current pace ... (The) OECD sees growth at 8.7 percent, the IMF sees it at 7.8 percent," Simsek said at a Bloomberg Newsweek forum.
"We don't think this is sustainable as the domestic savings rates are very low and that brings about challenges. We remain at the mercy of global risk appetite ... When we grow fast, we tend to post large current account deficits," he said.
The strong recovery has led to a widening of the country's current account deficit, which jumped 300 percent year-on-year to $4.08 billion in September.
Simsek blamed high oil prices for the current account gap.
"It comes from a low base. As a percentage of GDP, it represents 5.5 pct of GDP. We think the deficit is financeable and in that sense manageable ... It reflects strong growth relative to our peers," he later told reporters.
Excluding energy imports, the current account balance would be in surplus, he added.
Turkey's red-hot economic growth has attracted strong
capital inflows, sending its lira currency to two-year highs
against the dollar
Last week, the central bank slashed overnight borrowing rates by 400 basis points to 1.75 percent in an attempt to discourage short-term foreign money from parking their cash overnight with the central bank.
"Despite some risks associated with short-term capital inflows, we remain committed to the floating exchange rate system and the monetary policy framework we've been conducting for years," Simsek said.
"We are more focused (on) how to enhance our competitiveness through more fundamental steps," he said, adding that investment in infrastructure and education had been increased.
Simsek declined to comment on Turkey's immediate financing plans, saying that the 2011 financing plans would be unveiled by the debt management agency next month.
But he said the government was keen to extend sovereign debt maturities beyond the new 10-year limit it established this year. (Editing by James Dalgleish)