OECD lifts growth forecast for Turkey to 3.7 percent

OECD lifts growth forecast for Turkey to 3.7 percent

OECD lifts growth forecast for Turkey to 3.7 percent

The Organization for Economic Co-operation and Development (OECD) upgraded its economic growth forecast for the Turkish economy for 2022 to 3.7 percent from a previous 3.3 percent, while cutting the its estimate for next year from 3 percent from 3.9 percent.

“After a strong recovery in 2021, growth will moderate over the projection period,” said the OECD its latest economic outlook, published on June 7.

While exports will continue to benefit from the reallocation of global supply chains, the war in Ukraine will adversely affect external demand and commodity prices, the report added.

Fiscal policy will remain supportive over the projection period, with increases in public sector wages and support for energy consumers, the OECD, said recalling that to mitigate higher energy prices, the government has reduced the value-added tax on electricity used in residences and agricultural irrigation and has granted subsidies to 4 million households.

It however warned that the risks are on the downside as the adverse effects from the war could become much larger, particularly via commodity prices.

The OECD forecasts that inflation in Turkey will hit 72.3 percent this year, before falling to 35.1 percent in 2023.

It expects the unemployment rate unchanged at 11.8 percent in 2022 and the next year.

The organization also warned that that the world economy will pay a “hefty price” for Russia’s invasion of Ukraine as it slashed its 2022 growth forecast and projected higher inflation.

Global gross domestic product would grow by three percent in 2022 -- down sharply from the 4.5 percent estimated in December, it said.

The OECD also doubled its forecast for inflation among its members - which range from the United States to Australia, Japan, and Latin American and European nations - to 8.5 percent, its highest level since 1988.

“The world is set to pay a hefty price for Russia’s war against Ukraine,” wrote the OECD’s chief economist and deputy secretary-general, Laurence Boone.