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Tackling Turkey's External and Domestic Macroeconomic Imbalances

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  • Oliver Röhn
  • Rauf Gönenç
  • Vincent Koen
  • Ramazan Karaşahin

Abstract

Effective macroeconomic and structural policies helped Turkey bounce back quickly and strongly from the global crisis, with annual growth averaging close to 9% over 2010-11. However, the current account deficit widened to around 10% of GDP in 2011 and consumer price inflation rose to over 10%. The external deficit, which is far too large for comfort, is a source of vulnerability. So is high inflation, even if it partly reflects transient factors. These imbalances signal competitiveness problems and a dearth of domestic saving. They need to be addressed using both macroeconomic and structural policy levers. Monetary policy has recently tried to reduce the volatility of capital flows but inflation has been high and volatile. The inflation target needs to be given greater prominence. The fiscal stance remains broadly appropriate but could be tighter, if warranted, to complement monetary restraint and help keep the real exchange rate on a sustainable path. More balanced growth through strengthened competitiveness and greater private saving calls inter alia for increased labour force participation, accelerated formalisation, stronger productivity growth, improvements in financial literacy and a more attractive menu of saving instruments. Improvements in the business environment would spur foreign direct investment, making for healthier funding of the external gap. This Working Paper relates to the 2012 OECD Economic Survey of Turkey (www.oecd.org/eco/surveys/turkey). Corriger les déséquilibres macroéconomiques externes et internes en Turquie Des politiques macroéconomiques et structurelles efficaces ont permis à l’économie turque de sortir rapidement de la crise mondiale, avec une croissance annuelle moyenne proche de 9 % en 2010-11. Néanmoins, le déficit de la balance des opérations courantes s'est creusé pour atteindre près de 10 % du PIB en 2011, alors que la hausse des prix à la consommation a dépassé les 10 %. Le déficit extérieur constitue une source de vulnérabilité. Cela vaut également pour le taux d'inflation, même s'il est en partie imputable à des facteurs transitoires. Ces déséquilibres sont révélateurs de problèmes de compétitivité et d'une pénurie d'épargne intérieure. Il faut y remédier en s'appuyant à la fois sur les politiques macroéconomiques et structurelles. Les autorités monétaires se sont efforcées de réduire l’instabilité des flux de capitaux, mais l'inflation est restée élevée et fluctuante. Une plus grande importance doit être attachée à l'objectif d'inflation. L’orientation budgétaire reste à peu près satisfaisante, mais pourrait devoir être resserrée, au besoin, pour compléter la politique de restriction monétaire et contribuer au maintien du taux de change réel sur une trajectoire viable. Une croissance plus équilibrée reposant sur une compétitivité renforcée et une augmentation de l'épargne passe, entre autres, par une hausse du taux d'activité, la réduction de l'économie informelle, la croissance de la productivité, l'éducation financière et la mise en place d'une palette plus attrayante d'instruments d'épargne. Une amélioration de l'environnement des entreprises stimulerait l'investissement direct étranger, ce qui permettrait une couverture plus saine des besoins de financement extérieur. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Turquie, 2012 (www.oecd.org/eco/surveys/turkey).

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 986.

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Date of creation: 13 Sep 2012
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Handle: RePEc:oec:ecoaaa:986-en

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Keywords: monetary policy; current account; Turkey; competitiveness; saving; financial market policy; fiscal policy; politique monétaire; politique budgétaire; épargne; politique des marchés financiers; compétitivité; Turquie;

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