Turkey: Restore restraint
The economy, which had slowed down earlier in the year as a result of monetary tightening in 2006 and political uncertainties in the spring, gained momentum after the summer elections. In the absence of shocks, growth should settle at around 6% in 2008 and 2009.
Progress with enhancing the resilience and performance of the economy is at risk from a loss of competitiveness provoked by booming capital inflows. In this context the government is encouraged to restore fiscal restraint, which would help the central bank to continue reducing interest rates, and to increase the flexibility of product and labour markets to help the economy to cope with strong appreciation.
No. 264/265, December/January 2008
• OECD Economic Outlook No. 82, December 2007
• Visit www.oecd.org/turkey
• All OECD Observer articles on Turkey