Turkey’s economy has proven remarkably resilient in the face of a challenging global economic context, however, further action can be taken to raise productivity and advance the shift to a more balanced, sustainable and stronger growth path, the Orrganisation for Economic Cooperation and Development (OECD) said in the latest edition of its Economic Survey of Turkey published on July 15.
“To achieve strong and sustainable growth, domestic saving should be increased and demand rebalanced between domestic and external sources. The needed competitiveness gains must be achieved by reducing wage and price inflation and boosting productivity growth,” the OECD suggests. It also encourages prudent macroeconomic policies aimed at bringing down inflation, and boosting foreign direct investment. Turkey should strengthen the rule of law, judiciary independence and the fight against corruption in order to improve the credibility of governance institutions, the organisation says.
The OECD also warns that further escalation in regional and domestic tensions may affect economic performance and cautions about the impacts of a possible exchange rate shocks on inflation. Turkish economy is projected to grow by 3.9% this year and by 3.7% in 2017. The OECD's inflation forecasts for this and next year are 7.4% and 7.5%, respectively.
As far as the country’s large job market is concerned, the OECD thinks that the challenge of job creation in sustainable export-oriented activities is heightened by the presence of the 1.4mn working-age Syrian refugees. Better integrating them in the labour market would strengthen supply potential but will be challenging in the short term, the report says. The unemployment rate for this year is projected at 10.1% and at 10.2% for 2017.
|OECD forecasts for Turkey|
|Annual percentage change||2016||2017|
|Gross fixed capital formation||1.8||4|
|Total domestic demand||4.5||3.9|
|Consumer price index (growth rate, %)||7.4||7.5|
|Source: Economic Survey of Turkey, July 2016|
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