OECD says Turkey will grow 4 percent in 2008

"The deceleration of growth through 2007 appears to be extending into 2008 as unfavorable international conditions and domestic political uncertainty continue to weaken confidence in Turkey," the report said.

The report estimated a declining growth rate below 4 percent in 2008, before rising to about 4.5 percent in 2009.

Turkish economic growth slowed sharply in 2007 to 4.5 percent from an average 7.4 percent in the previous four years. This year's growth target is 5.5 percent.

Turkey must announce additional initiatives on fiscal transparency following the expected termination of the stand-by agreement with the International Monetary Fund (IMF) to increase confidence and accelerate the economic upturn, the OECD also said.

"In a context of uncertainties on a broad range of public governance conditions, maintaining confidence in the resilience of economic policies is important. Following the expected termination of the stand-by agreement with the IMF in May, the announcement of additional initiatives on fiscal transparency and rules and structural reforms, would help increase confidence and accelerate the economic upturn," the report said.
 
The uncertainties in Turkey were heightened after a closure case was filed in the Constitution Court against the ruling AKP in March claiming the party had become the "focal point of anti-secular activities".

The OECD Economic Outlook report analyzes major trends and examines the economic policies required to foster high and sustainable growth in member countries twice a year.

This latest report covers the outlook to end-2009 and aims to reveal the depth of the impact of recent oil and credit shocks on the productive potential of OECD economies and to what extent can structural reforms help to soften it. The report also aims to find ways of how economic policies should respond to the uncertainty created by these shocks.