The Organisation for Economic Cooperation and Development (OECD) on Thursday went on to revise upward Turkey’s growth forecast for 2020.
In its latest economic survey of Turkey, the Paris-based organization found that “the Turkish economy’s recovery from the first wave of the pandemic was strong but faced headwinds.”
It said the country’s growth rate is estimated to have declined by 0.2% in 2020 instead of 1.3% as previously expected.
It also projected the Turkish economy will grow by 2.6% and 3.5% in 2021 and 2022 respectively.
The OECD’s Economic Outlook Report published on Dec.1 predicted the growth would be 2.9% in 2021 and 3.2% in 2022.
“Turkey is looking at a gradual recovery from the COVID-19 crisis and risks persist for growth and well-being,” said Alvaro Pereira, OECD Director of Economic Country Studies.
“The focus should be on restoring macroeconomic stability and seeing the post-crisis period as an opportunity to encourage foreign and domestic investment through stronger public governance, and to use market and labour reforms to empower businesses to grow and create quality jobs,” Pereira said.
The global body also said it estimated the average inflation rate in Turkey to hit 12% and %10 in 2021 and 2022 respectively.
The report said Turkey achieved to restrain the number of coronavirus cases relatively effectively in the first phase of the outbreak thanks to a strong intensive care infrastructure and targeted lockdowns.
“The country went into the pandemic crisis with sound public finances but extensive off-balance sheet commitments,” it also noted, adding this came in the form of government credit guarantees and through lending by public banks.
It said a full recovery from the crisis is predicted to take time given Turkey’s relatively modest social safety nets and elevated corporate debt.
“The pandemic amplified monetary policy challenges,” it added.
The economy’s entrepreneurial power is striking even under challenging macroeconomic conditions and regional geopolitical tensions, the report underlined.
“Higher management quality would help Turkey to reap greater benefits from its entrepreneurial population,” it said.
Underlining that COVID-19 has increased financial pressure in productive sectors, the report also warned that Turkish companies are lagging behind in adopting advanced digital technologies.