TODAY’S – OECD raises Turkey’s growth forecast to 3.3 percent

OECD raises Turkey’s growth forecast to 33 percentThe Organization for Economic Cooperation and Development (OECD) raised its 2014 growth forecast for Turkey to 33 percent in its latest report.The previous OECD report, which was released in May, projected the country’s growth rate to be 28 percent for this yearIn its most recent report the OECD said the country should focus on rebalancing its economy by initiating policies aimed towards stabilizing inflation, exchange rates and credit levels.

“External demand is strengthening, in particular within a context of recovery in the European Union, but high inflation, exchange rate volatility and low productivity growth endures. Competitiveness remains fragile and dependence on foreign savings is very high.

Monetary and financial policies aim at disinflation while keeping the exchange rate and credit growth on a sustainable path, but inflation is well above target and private debt levels have risen substantially, albeit from a low level,” said the OECD.The OECD stressed that while public finances have improved in Turkey over the past 10 years, the country should improve how it conveys information regarding its public-private partnerships.

“While the overall fiscal position appears robust, public spending has increased considerably, in particular for education, health and pensions. Demographic trends, active social policies and large infrastructure projects will put additional pressure on public spending.

Accrual-based general government accounts need to be aligned further with international standards and fiscal and quasi-fiscal transactions associated with public-private partnerships need to be reported more systematically,” it said.“The regulatory framework burdens expanding firms with costly employment, tax and other obligations.

Uneven compliance with laws deepens business sector segmentation and tends to weaken trust. As a result, institutionalized enterprises face obstacles to growth,” said the OECD, adding that the implementation of a rule-based business environment would increase growth and productivity.

The OECD said that Turkey should expect 4 percent growth in 2015, and that inflation is likely to fall in the second half of this year but will remain above the 5 percent mark.

SOURCE: Today’s Zaman