Turkish Economy Remains Strong in the Right Way, But …

images (1)The European Commission annual progress report praises the Turkish Economy along with warnings.

The European Commission’s annual progress report for Turkey will emphasize that the Turkish economy remains strong in the right way, but the commission warns Turkey because of some structural problems, in particular the current account deficit and vulnerability to external factors.

The draft report indicates that Turkey’s growth performance in the context of global financial depression in recent years proves the Turkish economy’s improved fundamentals and enhanced resilience to external shocks. However, the large structural current account deficit which continues from several years and significantly high inflation rate show the persistence of significant chronic imbalances in the Turkish economy. Despite of the warnings, the commission’s draft report still says that the functioning of market mechanism has remained appropriate.

Additionally, the draft report includes praises for the Turkish Economy and Turkish Officials along with warnings; Turkish officials managed to stop the economic deceleration and reaccelerate the economy. Deputy Prime Minister responsible for economy Mehmet Ali Babacan is praised for his forceful monitoring on the financial system by the commission. However, the draft underlines the threat of the external deficit.

“Overall, the economic slowdown has ceased and economic activity has re-accelerated in the first four months of 2013,” said the draft. In last year’s report, the EU also praised the economy, but warned of a dramatic slowdown. The “economic criteria” section of last year’s report said, “Overall, economic growth is slowing down, from high levels, due to weaker domestic demand.”

One of the positive points in the draft report is data showing that the per capita GDP disparity between Turkey and the EU is getting closer. According to last years’ reports of the commission, the per capita GDP of Turkey in 2012 amounted to 56% of the EU average, up from 52% in 2011.

The EU Commission gives good marks to Ankara on the labour market, inflation and employment but it says undeclared work remains a widespread practice. “Employment has continued to grow at a robust rate, unemployment has continued to edge down but the female labour participation rate has remained very low,” says the draft. Also, the commission underlies that inflation rate has been reduced but it is still above the Central Bank of Turkey’s targets.

Last but not least, the draft report criticizes public procurement procedures and policies. The draft says that the legal framework for public procurement continued to comprise various exceptions and it is still not in line with the European Union and acquis communautaire. Overall, there has been no progress in improving the transparency of state aid in 2013.

 

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