OECD revises up Turkey’s growth forecast for 2020

Turkey's growth forecast for 2020 has been upgraded by The Organisation for Economic Co-operation and Development, citing the country's strong recovery after the first wave of the Covid-19 pandemic.

In its latest economic survey of Turkey on Thursday, OECD said the country's growth rate is estimated to have declined by 0.2 percent in 2020 instead of 1.3 percent as previously expected.

It also projected the Turkish economy will grow 2.6 percent and 3.5 percent in 2021 and 2022 respectively.

The report said Turkey was able 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.

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Fitch forecast

Global credit rating agency Fitch forecast Turkey's GDP growth rate will be 3.5 percent in 2021 with an acceleration in the second half, Douglas Winslow, director in the agency's sovereign team, told Anadolu Agency.

"The increase in interest rates and the commitment by the Central Bank to use a single funding rate (which improves predictability) is a step towards improving monetary policy credibility but this will take time to rebuild," said Winslow.

Fitch also expects that the country's GDP growth rate will be 0.2 percent for 2020 due to the lockdown measures while inflation will continue to be above the Central Bank targets, Winslow noted.

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Report highlights

The OECD's Economic Outlook Report published on December 1 predicted the growth would be 2.9 percent in 2021 and 3.2 percent in 2022.

The global body also said it estimated the average inflation rate in Turkey would hit 12 percent and 10 percent in 2021 and 2022 respectively.

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 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.

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