Turkey: Slowdown? Or even recession?
The growth of Turkey's economy was over 10% year-on-year in some quarters of the period 2010-2011. It may have decelerated recently, but it is not yet certain that this will lead to a more or less soft type of ‘landing’; a swift resumption of growth is feasible. In 2011, thanks to high real growth and a rate of inflation between 5% and 10%, growing budget revenues offered a nice opportunity to increase expenditures and decrease the budget deficit at the same time. This 'pro-active' fiscal policy will continue. The central bank, too, supports GDP expansion by keeping the policy rate low. However, this job is a bit tricky. The rate of inflation should not climb over 10%, and the exchange rate should remain rather stable. The high deficit in the current account is a main source of vulnerability. In the case of no major adverse external shock, growth is likely to accelerate again in 2013-2014.
Year of publication: |
2012-03
|
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Authors: | Pöschl, Josef |
Institutions: | Wiener Institut für Internationale Wirtschaftsvergleiche, wiiw |
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