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OECD Economic Surveys: Turkey 2006

image of OECD Economic Surveys: Turkey 2006

This edition of OECD's periodic survey of the Turkish economy presents an overview of recent economic performance and suggests that Turkey needs to improve management of economic risks and resilience to shocks.  It discusses enhancing competitiveness and growth through regulatory simplification, which should also reduce incentives to operate in the informal economy.  It alo assesses the pension system, making quality education accessible to the whole population, and freeing the potential of agriculture.

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Assessment and Recommendations

The recovery from the 2001 crisis has been impressive. Over the 2002-05 period, output increased by a third, representing the strongest pace of growth among OECD countries. At the same time, annual inflation fell steadily, reaching single digits in 2004 for the first time in three decades, while sound fiscal and monetary policies improved confidence and reduced risk premia, thereby enhancing business investment and FDI inflows. Thus good progress has been made towards a shift to a stronger and more sustainable growth path. Indeed, the process of real income convergence seems to have begun, following the disappointing periods of the late 1980s and the 1990s. If this path can be maintained, this would represent a significant break from the past decades of short-lived economic booms, followed by sharp downturns or recessions.

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