World Bank said in a statement issued on Friday that Turkey has recovered strongly from the 2008-2009 global crisis recording a real GDP growth of about 8% in 2010.
The statement said the strong recovery was underpinned by economic reforms undertaken since 2001, which according to the Bank made room for decisive policy easing during the crisis.
It said the employment has also surpassed pre-crisis levels but open unemployment still remained high (11.3% in October 2010) and represented a challenge both to social welfare and productivity.
World Bank said the government's inflation targeting also performed well, although the inflation policies were complicated by the high volume of short-term capital flows to the Turkish Economy.
"High short-term capital inflows in 2010, a corollary of loose global monetary policy as well as confidence in the Turkish economy, have buoyed economic activity and have financed a sharply increasing current account deficit, which has now returned to pre-crisis levels. The authorities have recently introduced measures to reconcile inflation targeting with a more aggressive approach to managing inflows," said the statement.
The Banks said the Government's track record was strengthened by its response to the global recession. It said although the Turkish Government foresaw a gradual improvement in public sector balances in its 2011-13 Medium Term Program, the composition of taxation and spending still posed longer-term challenges.
The Bank which sees "the reversal of capital flows" as the main macroeconomic risk for Turkey, warned this could cause a significant growth slowdown, given the high level of current account deficit.
"In the longer term, higher productivity, higher exports to more diverse markets, higher domestic saving, and greater energy efficiency and diversification are the keys to reducing Turkey's reliance on external finance. Improvements in these areas will require structural reforms in labor and product markets, which would not only have a positive effect on current account balances, but also on Turkey's growth potential," said the statement.
AALast Mod: 22 Ocak 2011, 11:16