|OECD praises Ankara for economic strides|
|Report endorses Turkey's bid to join EU
Turkey has opened up a window of opportunity with market reforms since a deep crisis four years ago and progress over EU membership would give a big boost, the OECD said in a report Thursday.
The report came as Turkey, recovering from severe economic distress in 2001-2002, is a focus of international attention over its attempts to become a member of the European Union.
OECD Secretary General Donald Johnston described the recovery under the reform program as "stunning."
"The survey shows economic performances that are stunning since 2001, with remarkable macroeconomics," he told a news conference.
The report praised Turkey for progress made through reforms, with growth now running at more than 8.0 percent, but said it had to do more to promote confidence and attract investment and remained at risk from "boom-and-bust" disruption.
OECD economist Andrew Dean said that Turkey's reforms had opened a "window of opportunity."
The report itself said: "The recent recommendation by the EU commission to start EU accession negotiations - if confirmed by the European Council in December - promises to strengthen the international anchors and could underpin Turkey's shift to a new economic regime." The council is scheduled to vote in Brussels on Dec. 17 on whether to invite Turkey to begin talks on its possible admission to the EU.
Dean added: "If the European Council follows the recommendations by the European Commission, this window of opportunity will open further.
"We certainly believe that the accession of Turkey to the EU would be very positive." The Paris-based OECD was to present its Turkey report later at a news conference in the presence of Turkish Prime Minister Recep Tayyip Erdogan.
The report addressed Turkey's emergence from its worst recession since World War II, brought on by the 2001-2002 crises, sparked by rows over banking reform and then over corruption.
Inflation soared and the currency plunged. The entire economic program, underwritten by the IMF, fell apart. The government, since replaced in elections, subsequently obtained a $16-billion (12.8-billion-euro) stand-by deal with the International Monetary Fund conditional on a three-year plan of major structural reforms.
The IMF deal is set to end in February 2005 and Turkish officials are currently engaged in talks with the Fund for a new stand-by deal.
The OECD Economic Survey of Turkey published Thursday emphasized the vulnerability of the economy to "boom-and-bust" cycle of its past.
The Turkish economy was among the fastest-growing OECD economies, with gross domestic product was set to exceed government growth targets of 8.0 percent, after slumping by 7.5 percent in 2001 and rebounding to 8.0 in 2002 and 6.0 percent in 2003.
Inflation had declined sharply and was poised to fall below 10 percent for the first time in 30 years.
But Turkey, the OECD's poorest country, faced three vicious circle "traps" that could stifle the recovery: low confidence in the emerging institutional set-up, weak governance and an informal, or underground, economy that accounts for more than half of all employment.
"Addressing these problems would make it possible for Turkey to enter into a virtuous circle of improved confidence, strengthened governance and increased normalization that could underpin a sustained period of strong growth," the report said.
The OECD said Turkey had made good progress in reducing its public debt, a main weakness following the crises.
Beirut,10 25 2004
The Daily Star