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OECD Revises Turkey's Real GDP Growth Forecast After US Tariffs - Report

© AFP 2022 / OZAN KOSEAn exchange office worker counts Turkish lira banknotes in Istanbul on June 8, 2015
An exchange office worker counts Turkish lira banknotes in Istanbul on June 8, 2015 - Sputnik International
BRUSSELS (Sputnik) - The Organisation for Economic Co-operation and Development (OECD) has revised downwards it forecast for Turkey's real GDP growth in 2019 from 5 percent to 0.5 percent amid the recent pressures on the Turkish lira, the organization's interim economic outlook, released on Thursday, said.

Turkey's growth prospects in 2018 have also weakened – from 5.1 to 3.2 percent, according to the document.

READ MORE: Erdogan Blames US for 'Heinous Economic Attack' on Turkey

The OECD also noted that the exchange rate of Turkish lira (vis-a-vis US dollar) had decreased by 41 percent.

According to the outlook, the slowdown in trade growth and the widespread political uncertainty are destabilizing factors for the global economy.

"Trade growth has stalled, restrictions are having marked sectoral effects and the level of uncertainty on trade stances remains high. It is urgent for countries to end the slide towards further protectionism, reinforce the global rules‑based international trade system and boost international dialogue, which will provide business with the confidence to invest… With tighter financial conditions creating stress on a number of emerging economies, especially Turkey and Argentina, a strong and stable policy framework will be key to avoid further turbulence," OECD Chief Economist Laurence Boone said.

The OECD believes that the global economy will increase by 3.7 percent in both 2018 and 2019, which is lower than the evaluations from the previous forecasts.

New Economic Program

Meanwhile, Turkish Finance and Treasury Minister Berat Albayrak presented the country's new medium-term economic program, projecting the growth of the Turkish GDP by 3.8 percent in the current year.

"Turkey's new economic program is based on three main principals: balance, discipline and reforms. It projects the Turkish economy to grow by 3.8 percent in 2018, 2.3 percent in 2019… inflation at the level of 20.8 percent, 15.9 percent… respectively. The expected unemployment rate will be 11.3 percent [in 2018], 12.1 percent [in 2019]… According to the program, it is planned to create about 2 million new jobs in Turkey by 2021," Albayrak said.

According to the minister, the country's current account deficit will be reduced from 4.7 percent GDP to 2.6 percent GDP in 2018-2021.

The minister also revealed that as part of the mid-term program the country's authorities would boost exports, expand the availability of credit for businesses and save funds from the cost of the public bodies' maintenance.

US-Turkey Trade Standoff

Global trade has been in turmoil with a rise of protectionism, currency instability in a number of countries, commodity price fluctuations as well as so-called trade wars involving mainly the United States and sanctions used as a geopolitical tool.

A U.S. dollar banknote is seen on top of Turkish lira banknotes in this picture illustration in Istanbul, Turkey August 14, 2018 - Sputnik International
Turkish Finance Minister Downplays Economic Risks Amid Ongoing US Spat
Earlier, Turkey's national currency lost almost 20 percent of its value, after US President Donald Trump authorized a 20 and 50 percent tariff hike on imported Turkish aluminum and steel, respectively.

Turkey retaliated with some $533 million of tariffs on US imports — including cars, tobacco and alcoholic drinks — and threatened to boycott US electronic goods, above all iPhones.

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