JCR: Turkey's growth resistant to challenges

Orhan Ökmen, Eurasia president at Japan Credit Rating (JCR), said that despite the fall of Turkey's growth rates, its economy has essentially settled upon a stable base, saying: "Capital inflow into Turkey is still continuing albeit rather interrupted. Although growth trends decline, stable growth maintains it resistance against global challenges, domestic political uncertainties, price instability and external disequilibrium."Ökmen added, "While the growth hovers around 3.5-4 percent, improvement in the composition of current account deficit and funding has enhanced Turkey's macropolitical standing as well as decreasing vulnerabilities."

Ökmen said that despite some negative developments such as low growth rate, momentum loss in the manufacturing industry, rising unemployment, chronic inflation and deterioration in risk perception, there is a growing trend in financial markets and rebalancing in foreign assets and liabilities. He added that the share of short-term funds in totality of funds is decreasing, and this is a positive development for Turkey. He continued: "The high labor force participation rate cannot be transformed into an opportunity, and it cannot grow at a level that can contribute to employment; this is a new risk factor for Turkey. The over-indebtedness of the private sector creates foreign vulnerability.

When we look at the entirety of banks, real and public sectors, short-term employment deficit constitutes a rather small portion of the overall deficit." "Under challenging external financing conditions, the banking system, with its durability and global competitive power, contributes considerably to the economy in foreign fund procurement. The public sector also has a significant political sphere and high maneuverability in external financing," Ökmen concluded.