OECD upgrades Turkey's GDP growth forecast as gov't measures succeed

Published 07.06.2017 14:46
Updated 07.06.2017 15:59

The Organization for Economic Co-operation and Development (OECD) raised Wednesday Turkey's growth forecast for the year to 3.4 percent, up from 3.3 percent, on the back of government measures.

"Economic activity slowed in 2016 against the backdrop of a failed putsch in July and increased geopolitical tensions in the region," the organization said in its economic outlook for June 2017.

"However, helped by numerous government measures, both private consumption and investment have started to recover," it added.

The upgrade came after the World Bank edged up the country's growth rate to 3.5 percent from 3 percent for 2017.

These latest growth figures are lower than the 4.4 percent forecast by the Turkish government.

The Paris-based organization estimated Turkey's growth rate to stand at 3.5 percent in 2018, down from 3.8 percent.

"Given continuing regional geo-political tensions, and prior to general elections in 2019, growth is projected to edge up to around 3.5 percent in 2017 and 2018," the report read. "Growth was helped by acceleration in exports thanks to improved demand from Europe and competitiveness gains delivered by exchange rate depreciation."

"If economic reforms are implemented, confidence could improve and growth could be stronger," the OECD said.

It also said that country's jobless rate in 2017 would increase to 10.8 percent from 10.7 percent in its previous forecast in January.

The organization also said the inflation rate will climb to 10.4 percent in 2017 up from 7.7 percent, then drop to 8.1 percent in 2018.

Meanwhile, the World Bank raised Turkey's economic growth projections for the next three years, according to its Global Economic Prospects report published Sunday.

Turkey's economy is now expected to expand 3.5 percent in 2017, up from an estimate of 3 percent in January.

Last year, Turkey's economy grew by 2.9 percent, down from 6.1 percent in 2015 and 5.2 percent in 2014.

The OECD also forecasted the global growth rate for 2017 at 3.5 percent; its projection for 2018 was 3.6 percent.

The organization said global growth was expected to pick-up with upside risks adding, "The global economic outlook is better, but not good enough to sustainably improve citizens' well-being."

"The mood in the global economy has brightened during the last year. Confidence indicators, industrial production, headline measures of employment, and cross-border trade flows have improved in most economies," the organization said.

Additionally, the OSCE's projection for China, which is one of the core countries for the global economy, stood at 6.6 percent for 2017 and 6.4 percent for 2018.

"Economic growth [China] is projected to hold up in 2017 and 2018, partly thanks to the impact of earlier fiscal and monetary stimulus," the report said. "Infrastructure investment is picking up on the back of regional development initiatives, including the Belt and Road and the Beijing-Hebei-Tianjin Corridor."

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