Oecd Economic Surveys: Turkey 2021 © Oecd 2021
Total Page:16
File Type:pdf, Size:1020Kb
OECD Economic Surveys Turkey January 2021 OVERVIEW http://www.oecd.org/economy/turkey-economic-snapshot/ This Overview is extracted from the 2021 Economic Survey of Turkey. The Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries. This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Note by Turkey The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”. Note by all the European Union Member States of the OECD and the European Union The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus. Photo credits: Cover © Ministry of Culture and Tourism, Turkey. OECD Economic Surveys: Turkey© OECD 2021 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected] of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 3 Table of contents Executive Summary 7 1 Key policy insights 13 The COVID-19 shock is having a large economic and social impact 14 Targeted lockdowns and health policy initiatives were initially effective but there is a second wave 14 Strong policy stimulus triggered a vigorous rebound which faced headwinds 17 Balance-of-payment strains have been significant 23 The recovery will be uneven and there are important risks 24 Policy priorities for containing the pandemic and supporting the recovery 26 Strengthening macroeconomic fundamentals after the shock 27 Re-balancing demand and securing external sustainability 27 Moving to a more transparent and predictable fiscal framework 31 Boosting long-term fiscal credibility 37 Stabilising inflation and increasing monetary policy credibility 40 Strengthening employment, job quality and social cohesion after the COVID-19 shock 46 Resuming progress in well-being and social cohesion 52 Regional convergence of living standards 54 Social trust 55 The region’s special challenges 56 De-carbonising the economy and improving air quality 57 Upgrading public governance 60 Policy choices will be key to how Turkey emerges from the COVID-19 crisis and in the years ahead 66 Annex A. Turkey’s follow-ups to main past OECD recommendations 69 Annex B. Fiscal implications of the reform recommendations of this Survey 71 Bibliography 72 Tables Table 1. The upturn will be gradual 8 Table 1.1. Macroeconomic indicators and projections 25 Table 1.2. Events that could trigger major changes in the economic outlook 26 Table 1.3. Public-private partnerships* 38 Table 1.4. GDP impacts of reforms 66 OECD ECONOMIC SURVEYS: TURKEY 2021 © OECD 2021 4 Figures Figure 1. The short-term recovery was sharp 8 Figure 2. Recovery prospects are complicated by high debt burdens 8 Figure 3. Labour force participation is low 9 Figure 4. The productivity gap between small and large firms has increased over time 10 Figure 5. Educational outcomes need to be upgraded 10 Figure 1.1. An intense second wave after the initial success against the pandemic 16 Figure 1.2. A sharp macroeconomic shock 22 Figure 1.3. The current and capital accounts have deteriorated 23 Figure 1.4. Re-balancing has made progress, but with slower growth and job creation 28 Figure 1.5. External debt is expanding strongly 29 Figure 1.6. Risk premia are excessive and should be reduced 30 Figure 1.7. Credit growth was exceptional after the COVID-19 shock 32 Figure 1.8. Banks have weathered the 2018 strains but will come under pressure after the pandemic 33 Figure 1.9. The fiscal stance loosened considerably already before the COVID-19 shock 35 Figure 1.10. High interest costs and ageing create pressures on public debt 39 Figure 1.11. Monetary policy has failed to achieve the inflation target 43 Figure 1.12. Nominal and real exchange rates have deteriorated before the recent uptick 44 Figure 1.13. The COVID-19 shock worsened the already weakened labour market situation 49 Figure 1.14. Unregistered employment varies across regions, sectors, firm sizes and education levels 50 Figure 1.15. Labour force participation is low, particularly for women 51 Figure 1.16. Labour market reforms would stimulate job creation in the formal sector 52 Figure 1.17. Well-being can be improved in several dimensions 53 Figure 1.18. Working-age people who are unemployed or in inactivity are more likely to be poor 54 Figure 1.19. Income and wealth inequalities remain high 54 Figure 1.20. The convergence of living standards tended to stall 55 Figure 1.21. The carbon intensity of the economy should be reduced 57 Figure 1.22. There is little or no carbon pricing in most sectors, except for road fuel 58 Figure 1.23. Air quality and other local environmental conditions should improve 60 Figure 1.24. Room for progress in governance institutions exists 61 Figure 1.25. Rule-of-law should be improved 62 Figure 1.26. Risks of corruption, tax opacity and money laundering 65 Boxes Box 1.1. Main COVID-19 support measures 18 Box 1.2. Curbing the high risk premia 30 Box 1.3. The Sovereign Wealth Fund (TVF) 36 Box 1.4. Upgrading fiscal institutions 38 Box 1.5. Capital flows and exchange rate measures 44 OECD ECONOMIC SURVEYS: TURKEY 2021 © OECD 2021 5 Follow OECD Publications on: http://twitter.com/OECD_Pubs http://www.facebook.com/OECDPublications http://www.linkedin.com/groups/OECD-Publications-4645871 http://www.youtube.com/oecdilibrary OECD Alerts http://www.oecd.org/oecddirect/ This book has... StatLinks2 A service that delivers Excel® files from the printed page! Look for the StatLinks2at the bottom of the tables or graphs in this book. To download the matching Excel® spreadsheet, just type the link into your Internet browser, starting with the http://dx.doi.org prefix, or click on the link from the e-book edition. OECD ECONOMIC SURVEYS: TURKEY 2021 © OECD 2021 6 BASIC STATISTICS OF TURKEY, 2019 (Numbers in parentheses refer to the OECD average) LAND, PEOPLE AND ELECTORAL CYCLE Population (million) 83.4 Population density per km² (2018) 107.0 (38.0) Under 15 (%) 24.3 (17.9) Life expectancy at birth (years, 2018) 77.4 (80.1) Over 65 (%) 8.7 (17.1) Men (2018) 74.4 (77.5) International migrant stock (% of population) 7.0 (13.3) Women (2018) 80.3 (82.8) Latest 5-year average growth (%) 1.6 (0.6) Latest general election June-2018 ECONOMY Gross domestic product (GDP) Value added shares (%) In current prices (billion USD) 762.0 Agriculture, forestry and fishing 7.1 (2.6) In current prices (billion TRY) 4 320.2 Industry including construction 30.8 (26.8) Latest 5-year average real growth (%) 4.1 (2.2) Services 62.1 (70.5) Per capita (000 USD PPP) 28.1 (48.5) GENERAL GOVERNMENT Per cent of GDP Expenditure (2018, OECD: 2019) 34.6 (41.6) Gross financial debt (2016, OECD: 2018) 31.8 (95.8) Revenue (2018, OECD: 2019) 31.5 (38.5) Net financial debt (2016, OECD: 2017) 18.4 (68.7) EXTERNAL ACCOUNTS Exchange rate (TRY per USD) 5.67 Main exports (% of total merchandise exports) PPP exchange rate (USA = 1) 1.84 Machinery and transport equipment 31.2 In per cent of GDP Manufactured goods 24.8 Exports of goods and services 32.7 (54.2) Miscellaneous manufactured articles 17.6 Imports of goods and services 29.9 (50.6) Main imports (% of total merchandise imports) Current account balance 1.2 (0.3) Machinery and transport equipment 25.2 Net international investment position -45.1 Commodities and transactions, n.e.s. 18.0 Manufactured goods 16.1 LABOUR MARKET, SKILLS AND INNOVATION Unemployment rate, Labour Force Survey (aged 15 and 13.7 (5.4) Employment rate (aged 15 and over, %) 45.7 (57.6) over, %) Men 63.1 (65.6) Youth (aged 15-24, %) 25.2 (11.7) Women 28.7 (50.0) Long-term unemployed (1 year and over, %) 3.2 (1.4) Participation rate (aged 15 and over, %) 53.0 (61.1) Tertiary educational attainment (aged 25-64, %) 22.0 (38.0) Average hours worked per year Gross domestic expenditure on R&D (% of GDP, 2017, 1.0 (2.6) 1,832 (1,659) OECD: 2018) ENVIRONMENT Total