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Reducing Macroeconomic Imbalances in Turkey

Author

Listed:
  • Oliver Röhn

    (OECD)

  • Rauf Gönenç

    (OECD)

  • Vincent Koen

    (OECD)

  • Evren Erdoğan Coşar

    (OECD)

Abstract

Turkey recovered swiftly from the global financial crisis but sizeable macroeconomic imbalances arose in the process. High consumer price inflation and a wide current account deficit are sources of vulnerability. Even though below-potential growth helps rebalancing and disinflation, these imbalances endure. The financial sector still looks resilient thanks to buffers built up mainly prior to the financial crisis. However, private sector balance sheet risks have gained prominence as leverage increased. Macroeconomic and structural policy levers need to steer a passage between robust but externally unsustainable growth and externally viable but low growth. Monetary policy needs to bring inflation and inflation expectations closer to target. Macroprudential policies could more systematically lean against capital inflows and credit cycles to reduce private sector balance sheet vulnerabilities. The fiscal stance is broadly appropriate, but compliance with a multi-year general government spending ceiling would help avoid pro-cyclical loosening in case of revenue surprises and help boost domestic saving. Overall, policies should help reduce the risk of disruptions in capital flows as monetary policy stimulus is being withdrawn in the United States. Réduire les déséquilibres macroéconomiques en Turquie La Turquie s’est remise rapidement de la crise financière mondiale, qui a toutefois laissé dans son sillage des déséquilibres macroéconomiques importants. Le niveau élevé de l’inflation des prix à la consommation et l’ampleur du déficit de la balance courante sont des points de vulnérabilité. Même si une croissance inférieure à son potentiel contribue au rééquilibrage de l’économie et à la désinflation, les déséquilibres perdurent. Le secteur financier paraît encore résilient, grâce aux volants de sécurité constitués pour l’essentiel avant la crise financière, mais les risques entourant les bilans se sont accrus dans le secteur privé à mesure que l’endettement se développait. Les autorités devraient faire jouer les leviers macroéconomiques et structurels pour trouver une voie entre les deux écueils que constituent une croissance robuste mais non tenable extérieurement et une croissance extérieurement viable mais faible. La politique monétaire devrait permettre de rapprocher l’inflation et les anticipations d’inflation de l’objectif. Les politiques macroprudentielles pourraient être plus systématiquement orientées à contre-courant des entrées de capitaux et des cycles du crédit, pour réduire les vulnérabilités des bilans dans le secteur privé. L’orientation budgétaire est globalement appropriée, mais un plafonnement pluriannuel des dépenses des administrations publiques contribuerait, s’il était respecté, à éviter un assouplissement procyclique en cas de surprise au niveau des recettes ainsi qu’à doper l’épargne intérieure. Globalement, l’action des pouvoirs publics devrait aider à réduire le risque de ruptures dans les flux de capitaux, dans le contexte de l’abandon progressif de la politique de relance monétaire des États-Unis.

Suggested Citation

  • Oliver Röhn & Rauf Gönenç & Vincent Koen & Evren Erdoğan Coşar, 2014. "Reducing Macroeconomic Imbalances in Turkey," OECD Economics Department Working Papers 1160, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1160-en
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    File URL: https://doi.org/10.1787/5jxx055pjf0x-en
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    More about this item

    Keywords

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

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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