Türkiye projection note OECD Economic Outlook November 2022

Page 1

218 

Türkiye GDP growth will moderate from 5.3% in 2022 to around 3% over the projection period. Inflation will decline but remain above 40%. This will dent household purchasing power while heightened uncertainty will hold back investment. Export growth will slow as external demand weakens. The unemployment rate is projected to stay above 10% in 2023. Large external financing needs and low reserve buffers leave the economy highly vulnerable to shocks. The central bank should raise its policy rate and provide credible forward guidance for a realistic convergence path to the official inflation target to shore up confidence and re-anchor inflation expectations. Measures to shield households from rising energy prices are welcome but should be temporary and targeted to keep fiscal costs manageable. Reducing employment costs and promoting more flexible work contracts would boost job creation in the formal sector. Growth has been strong, but vulnerabilities are rising Real GDP grew by 7.5% in the first half of 2022 (year-on-year), one of the fastest growth rates in the OECD. Buoyant private consumption has been driven by favourable labour market developments as labour force participation returned to pre-pandemic levels. Exporters have been able to exploit opportunities from disruptions of Asian supply chains, and tourism has fully recovered in 2022. However, investment activity has been subdued and macroeconomic imbalances have risen. The current account deficit has widened due to increased energy imports, and consumer price inflation reached 85.5% and producer price inflation 158% by October 2022. The minimum wage was raised by 30% in July, six months after a 50% increase. Lira depreciation has raised import price pressures. Monthly domestic indicators such as electricity production suggest that economic activity is decelerating.

Türkiye

1. Producer price index refers to domestic industrial activities. 2. The last data point refers to 14 November 2022. Source: OECD Main Economic Indicators database; BIS; and CBRT. StatLink 2 https://stat.link/3kdjyh

OECD ECONOMIC OUTLOOK, VOLUME 2022 ISSUE 2: PRELIMINARY VERSION © OECD 2022


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.