UPDATE 1-Turkey 2009 inflation to be below target-econmin

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LONDON, Sept 17 (Reuters) - Turkey's inflation will come in below the country's 7.5 percent inflation target this year, Turkey's economy minister Ali Babacan said on Thursday.

"We are going to hit below our inflation target this year," Babacan said in a speech.

Turkish consumer prices fell 0.3 percent month-on-month in August, giving a year-on-year rise of 5.33 percent. [nL3518282]

The central bank cut interest rates by 50 basis points to a record low 7.25 percent earlier on Thursday and said the pace of economic recovery would determine the size and duration of further cuts.

Turkey revised down its 2009 forecast for gross domestic product on Wednesday to a contraction of 6 percent from a previous estimate of a 3.6 percent contraction, and forecast a much larger budget deficit than its original projection. [nLG151474]

The International Monetary Fund welcomed Turkey's medium-term economic plan, but said if it wants to meet public debt targets it will need to adopt additional measures, including policies to tackle spending pressures. [nN16165542]

Investors are waiting to see if Turkey will sign a loan deal with the IMF, after the previous one expired over a year ago, although analysts are divided as to whether the country needs one.

Turkey's finance ministry will present a medium-term fiscal plan on Friday.

Turkey is one of the G20 countries, whose leaders meet next week for the second G20 summit this year in an attempt to deal with the global financial crisis.

"G20 has emerged as the most relevant platform to deal with this crisis," said Babacan, but added:

"Most financial and economic indicators are still below their pre-crisis levels. Stimulus packages, rescue packages have brought about a deterioration in budget deficits."

(Reporting by Carolyn Cohn, Editing by Chizu Nomiyama)