European Commission Raises 2011 Growth Forecast fo Turkish Economy

The European Commission raised its 2011 growth forecast for Turkish economy to 6.1 percent from an earlier forecast of 4.5 percent.

In its economic forecast report for spring 2011, the commission said, “Turkey’s fiscal consolidation in the past decade is an impressive success story.”

The report projected that Turkey’s growth, which touched 8.9 percent in 2010, would slow down but continue in 2011.

Labor market developments, credit growth, capacity utilization, and consumer and business confidence continued strong growth in 2011, the report said.

Turkish exports may be affected by the political turmoil in the Middle East and Africa region, the destination of over 20 percent of the country’s exports, rising energy prices and strong domestic demand caused a big gap in current account balance and the economy showed some signs of overheating, it said.

Growth is expected to moderate to a more sustainable pace as a result of a more restrictive monetary and fiscal policy mix in the second half of 2011 and in 2012, it added.

However, the commission praised Turkish government’s success to bring down country’s debt burden. “In the wake of the 2001 financial crisis, the government managed to cut the public debt-to-GDP ratio from 75 percent to about 40 percent today. As a result of expansionary fiscal policy, public finances deteriorated in 2009 but improved in 2010, and continue to improve in early 2011.”

According to the report, Turkey’s estimated 6.1 percent growth in 2011 would help the country achieve leadership among EU and candidate countries. Closest countries will be Lithuania with 5 percent GDP growth, Estonia with 4.9 percent, Sweden with 4.2 percent and Poland with 4 percent.

EU average for GDP growth is projected as 1.8 percent in 2011.

May 13, 2011
SOURCE: HURRIYET DAILY NEWS