IMF: Turkey not immune to stress in global markets due to high CA deficit.

By bne IntelliNews September 23, 2011
The IMF announced the preliminary conclusions of article IV consultations. The Fund says the Turkish economy remains more robust than many economies but it is not immune to stress in international financial markets due to its high current account deficit, low share of FDI and long-term borrowing in total external financing. The economic outlook depends on the availability of foreign savings and Turkeys capacity for import replacement, says the IMF, which underlines that the focus of fiscal policy should extend beyond public debt sustainability to reducing absorption of short-term inflows that contribute to boom-bust cycle. Monetary policy, the Fund says, should restore its focus on price stability with a transparent and consistent operating framework. The policy rate needs to be adjusted if headline inflation is projected to miss the year-ahead point target, according to the IMF, which also comments that halting foreign currency sales would conserve hard-earned reserves.

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