Letzte Zeitpunkt für günstigen Einstieg !

On February 11, 2011, the Executive Board of the International  Monetary Fund (IMF) concluded the Second Post-Program Monitoring  Discussions with Turkey.¹

Background

The Turkish economy’s strong post-crisis recovery continued  throughout 2010, supported by high levels of capital inflows. Growth is  projected to have exceeded 8 percent in 2010, placing output above its  pre-crisis level, with credit-financed domestic demand the main driver.  Helped by a drop in volatile food prices, headline inflation came in  just below the 2010 target, while temporary factors compressed core  inflation.

Push and pull factors are behind Turkey’s intensified capital  inflows. Wide interest rate differentials, Turkey’s relatively healthy  public- and private-sector balance sheets, strong near-term growth  prospects, increased political certainty, and the prospect of a possible  upgrade to investment status have all supported inflows.

Yet availability of abundant low-cost foreign savings has also  highlighted Turkey’s vulnerabilities. The rapid bounce-back in the  current account deficit (to 6¼ percent of GDP in 2010) reveals the high  import content of domestic and external demand and growth’s dependence  on capital inflows, which are symptomatic of weak external  competitiveness. Predominantly short-term capital inflows—mostly  intermediated by the banking sector—have increased exposure to capital  flow reversal and associated repricing risks.

To varying degrees, policies implemented in recent months have sought  to mitigate these macroeconomic and macroprudential risks. The Central  Bank of Turkey (CBT) slowed the pace of liquidity growth, mostly by  reducing its foreign exchange purchases and raising reserve  requirements. More unconventionally, it also sharply widened its  interest rate corridor and lowered its policy lending rate. Some  financial sector prudential standards were tightened, including setting  ceilings on real estate loan-to-value ratios. The primary balance of the  nonfinancial public sector exceeded the budget target in 2010 on  buoyant—but partially transient—tax revenue derived from the import  boom. Excluding such revenue, the underlying fiscal balance declined,  adding to demand pressures. Further demand pressures are expected in  2011.

On the expectation of continuing capital inflows, domestic demand is  projected to remain strong and the current account deficit elevated. GDP  is forecast to expand by a robust 4½ percent in 2011. Strong import  growth amid subdued exports and higher energy prices are projected to  widen the current account deficit to 7 percent of GDP. Following a lull  early in the year from dissipating base effects, inflation is expected  to rise to 6½ percent by end-year on increasing demand and cost  pressures.

Executive Board Assessment

Executive Directors welcomed the strong recovery of the Turkish  economy during 2010, with output exceeding its pre-crisis level and  unemployment moderating significantly. They noted, however, the sharply  widening current account deficit, which is linked to weak  competitiveness in the context of abundant low-cost external financing.

Directors concurred that Turkey’s main challenge is determining the  right policy mix in the face of vulnerabilities arising from excessive  domestic demand and volatile short-term capital flows. They recognized  that Turkey’s favorable near-term growth prospects and healthy balance  sheets would likely continue to attract capital inflows, but also  cautioned against the risk of a sudden capital flow reversal. They noted  that these vulnerabilities could be effectively addressed through a  combination of fiscal and macroprudential tightening, more restrictive  liquidity conditions, and competitiveness-enhancing structural reforms.

Directors considered the authorities’ planned fiscal policy in 2011.  While some Directors viewed the policy stance as broadly appropriate,  many called for fiscal tightening to restrain domestic demand and  rein-in the current account deficit.

Directors agreed that monetary policy should continue to focus on  price stability, essential for durably strengthening competitiveness.  They encouraged the authorities to continue with direct measures to  contain liquidity expansion, including limiting exchange rate  interventions and increasing reserve requirements. Directors welcomed  the early signs of success of the Central Bank’s strategy to allow  increased volatility of short-term market interest rates. They noted  that recent decreases in policy rates entail some risks and urged the  authorities to stand ready to raise the policy rate in the event current  measures are insufficient to contain inflationary pressures.

Directors welcomed the authorities’ increased focus on systemic  financial-sector risk and a moderate tightening of macroprudential  measures. A number of Directors, however, called for further actions in  these areas. Directors also welcomed the upcoming Financial Sector  Assessment Program update.

Directors encouraged progress on structural reforms to enhance  competitiveness and resilience to capital inflows. They welcomed the  improvement in accounting standards and strengthening of shareholder  rights under the recently approved Commercial Code.

Directors welcomed the authorities’ continued commitment to their Post-Program Monitoring with the Fund.

¹  Post-Program Monitoring provides for more frequent consultations  between the Fund and members whose arrangement has expired but that  continue to have Fund credit outstanding, with a particular focus on  policies that have a bearing on external viability. There is a  presumption that members whose credit outstanding exceeds 200 percent of  quota would engage in Post-Program Monitoring.