In the OECD report where it was explained that 3,4% growth in 2017 and 3,5% in 2018 is expected from Turkish economy, it is recorded that there will be a major growth in the economy in case the government practices the reforms.
The Organisation for Economic Co-operation and Development(OECD) raised its expectations towards Turkey on the Global Economic Outlook report published in June. OECD while revising 2017 GSYH growth expectation by raising, decreased its forecast for 2018. Accordingly, the growth forecast of Turkey for 2016, 2017 and 2018 were described respectively as 3,1%, 3,4% and 3,5%.
OECD forecasts a slowdown on disinflation
It is foreseen that consumer price inflation will be back in double digits and disinflation will be slow. The inflation forecast for 2016, 2017 and 2018 are projected as 78%, 10,4% and %8,1. The unemployment rates fro 2016, 2017 and 2018 are projected as 10,9%, 10,8% and 10,9%. Current accounts deficit of Turkey is evaluated as 3,4%, 4,8% and 4,6% in the relevant years.
These are stated in the report; “As the export demand increased, the supported fiscal and other measurements, private consumption and investments were encouraged. The impacts on public finance and quality of credit allocation must be monitored. The monetary stance has been tightened because of sharp exchange rate depreciation and rising inflation expectations; but explicit increases are needed in the main policy rate.”
OECD; “deepenign of the customs union agreement is a key factor”
It is emphasized in the report that increasing net exports throught further integration in global and European value chains is crucial for job creation in the face of a high unemployment rate, without further increasing the current account deficit. It is also recorded that the long-planned, though now uncertain deepening of the customs union agreement with European Union and its extension to agriculture and service sectors is the key factor. It is said thusly; “To make the most of the resulting opportunities, up-skilling programmes should be implemented; not only for young workers but also for entrepreneurs and low-skilled workers. ”
In the report where it is stated that economic activites slowed down in 2016 due to the geopolitic tension and 15th of July coup attempt; it is also stressed that private sector consumption and investmenst started to recover thanks to various government measures. Considering the continous rise in labour force, unemployment rate among young people reached to a historically high number; 24%in early 2017.
It is expressed that economic growth is encouraged by acceleration of goods exports; on the back of improving demand from Europe and competitiveness gains delivered by exchange rate depreciation. In contrast, service exports, while are dominated by tourism(represents 16% of total exports) service exports are stated to remain weak. It is pointed out that in contrast to tourist inflow from Russia resumed. The inflow of visitors from Europe remained subdued. Therefore, it is defended that the current account deficit widened again.
New fiscal stimulus measures have been taken
It is recorded in OECD report that policymakers used of the fiscal space created by past budget restrain to launch measures to support private consumption, investment and job creation.
Substantial restructuring of tax and social security contribution obligations were offered. There was VAT(Value Added Tax) cuts on Purchases of new housing, furniture and white goods. Prudential rules for consumer loans and credit cards were relaxed. In the business sector, goverment credit guarantees covering from 85% to 100% of bank loans to large firms, SMEs(Small and Medium Sized Enterprises) and exporters, and zero-interest loans to large numbers of SMEs were formes.The report defends that this process should be kept under control because of the excessive balance sheet. In the report reminding that some campaigns and measurements were implemented in regards of increasing the employment rate, it is defended that the complete reporting of the costs of new incentive measurements was important for finding external financing without any problems.
In the report stating uncertainities continues highly, it is recorded that there can be a significant growth on the condition that delayed reforms are implemented. It is also claimed that in the case of the tension geopolitical and local tension or Turkey-EU relations get worse; business reliance, investments and growth will be weakened and the risks related to external funding will increase.