OECD nearly doubles 2017 growth forecast for Turkey to over 6 pct
The Organization for Economic Cooperation and Development (OECD) has significantly raised its 2017 growth forecast for Turkey to over 6 percent, by citing strong fiscal stimulus and rebound in exports.
“Economic growth is estimated to have exceeded 6 percent in 2017, driven by strong fiscal stimulus and an export market recovery,” the OECD said in a note of its latest outlook on Turkey, which was released on Nov. 28.
“It is projected to edge down but to stay between 4.5 percent and 5 percent in 2018 and 2019,” it added.
The OECD’s previous Turkey growth forecast for 2017 was 3.4 percent, up from 3.3 percent. Its 2018 forecast was 3.5 percent in the previous report.
The OECD also warned of several uncertainties regarding the Turkish economy, urging restoration in investor confidence.
“If regional and domestic uncertainties were to be reduced, including through progress in the updating of the Customs Union agreement with the European Union, a stronger acceleration in domestic and international business investment could lift growth onto a stronger path. If, in contrast, uncertainties grow in these areas, confidence would weaken, international financing conditions may tighten and growth would be slower,” it noted.
The OECD also said that consumer price inflation remained far above the target and disinflation is projected to be slow.
The increase in the OECD’s growth outlook for Turkey followed the International Monetary Fund upping Turkey’s 2017 growth forecast 2.6 percentage points on Oct. 10, the World Bank raising its forecast 0.4 percentage points on Oct. 19, the European Bank for Reconstruction and Development (EBRD) lifting it by 2.6 percentage points on Nov. 7 and the EU increasing by 2.3 percent on Nov. 11.
Turkey’s economy expanded beyond forecasts in the first quarter (5.2 percent) and second quarter (5.1 percent) of this year, according to the Turkish Statistical Institute (TÜİK).
Global economic growth ‘set to peak eight-year high’
Global economic growth is set to peak at an eight-year high next year as uninspiring investment and increasingly dangerous debt levels limit room for further improvement, the OECD said.
The global economy is on course to grow 3.6 percent this year before reaching 3.7 percent next year then ease back to 3.6 percent in 2019, it noted.
The Paris-based policy forum nudged up its estimate for this year from 3.5 percent in its last forecasts dating from September, and left its 2018 projection unchanged.
“Things look really good now, but unless we see some robust private sector activity and renewal of capital stock, generating higher real wages, we are not going to maintain the growth rates we see today,” OECD chief economist Catherine Mann told Reuters.
“There is still work to be done, we are still resting a bit comfortably on the incoming data, which have been supported by fiscal and monetary policy,” she added.