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EMportal in Istanbul

"Turkey's recovery depends on reforms, global growth"

30. January 2010. | 09:16

Source: Turkish Daily News

Turkey needs to stick with implementing reforms to secure further employment opportunities and productivity, economic guru Nouriel Roubini says.

Turkey needs to stick with implementing reforms to secure further employment opportunities and productivity, economic guru Nouriel Roubini says.

Turkey's economy will grow this year, but the speed of that recovery will depend on the reforms adopted and on the global rally, says Nouriel Roubini.

The first economist to foresee that a period of global economic crisis was in fact approaching has said that he has a warm optimism regarding Turkey’s economy.

Though the country will see growth this year, the speed of that recovery will depend on the reforms adopted and on the global rally, according to Nouriel Roubini, a professor of economics at New York University’s Stern School of Business and the chairman of Roubini Global Economics, an economic consultancy firm.

“Turkey’s economy has started its recovery period,” said Roubini. “However, the speed of that recovery will not depend only on internal affairs. Development in global platforms is also a key to Turkey’s economic recovery. And the recovery of the global economy is not something Turkey can single-handedly do anything about.”

According to the economist, most of Turkey’s trade relations involve European countries, so improvement in European markets would certainly help speed up the country’s economic growth. What Turkey can control is its implementation of reforms to secure competitive power, increase employment and productivity, Roubini added.

International rating agencies have a positive approach to Turkey, he said, noting that as long as the country continues to implement a strong, secure monetary and fiscal policy, these agencies may up its rating even further, to an investment grade.

Bloomberg meanwhile cited Türker Hamzaoğlu, an emerging-markets economist at Bank of America Corp.-Merrill Lynch & Co., as saying that the Turkish Central Bank’s monetary policy was “too loose.”

“Actions speak louder than words. We expect the Central Bank to start hiking rates in May,” the London-based Hamzaoğlu wrote in an e-mailed report Friday, adding that the first half of the year “will be challenging for the bank to convince the market that higher inflation is temporary.”

In regards to precautionary measures, Roubini said a deal with the International Monetary Fund could be a determining element for the speed of growth experienced.

IMF, Turkey have up to 85 percent agreement

IMF chief Dominique Strauss-Kahn also commented in an interview with Bloomberg in Davos, Switzerland, late Thursday on how talks with Turkey on a loan accord were progressing. The IMF has held negotiations with the government on a new program since a previous agreement expired in May 2008. Prime Minister Recep Tayyip Erdoğan said last month that the two sides were near an accord.

“When a country is doing rather well they may need our advice, they may need our technical assistance, they may need our loans sometimes,” said Strauss-Kahn. “We’ve been discussing with the government now for a long time, but it appears more and more obvious that Turkey’s economy is doing rather well.

“We still have some differences in forecasts we have in terms of growth, but not that much. I think that on maybe 80 to 85 percent we agree with what the government is saying,” she added. “The standby agreement will be helpful for the Turkish economy but is not absolutely necessary so there’s no rush.”

Speaking about article four, the IMF’s regular inspection of economies, Strauss-Kahn said: “It’s an obligation for a country to accept that the IMF come and look what’s going on. Either we need to have a program with Turkey or we have to have this normal article four, as we have with other G-20 members.”


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