Turkey could become high-income country in five years: World Bank
Plummeting oil prices is seen as an opportunity for Ankara
Turkey could become a high-income nation within five years, provided the government boosts productivity and embraces much needed structural reforms to improve the rule of law, the World Bank’s country director said on Monday.
Turkey’s economy has enjoyed more than a decade of impressive growth under prime minister and now President Tayyip Erdogan and his ruling center-right AK Party.
However, mounting global financial headwinds, along with a large current account deficit and lagging foreign investment, have taken their toll. The government has cut its growth forecasts for 2014 and 2015 to 3 percent and 4 percent respectively.
The World Bank’s Martin Raiser told Reuters he was hopeful that Turkey can push per capita gross national income above the high-income threshold of $12,746 from nearly $11,000 in 2013.
“I would argue that Turkey is now in the position where it wants no longer to be in the basket of the Nigerias, but rather the basket of the Polands and the Mexicos,” he said in an interview.
Last week, Raiser unveiled a new World Bank report that showed Turkey attracting much less foreign capital since the global financial crisis after peaking in 2007.
In 2013, the government promised a raft of reforms aimed at overhauling institutions to attract investment, diversify production and boost participation in the workforce.
However, progress has largely stalled amid a bitterly contested election cycle and regional security challenges.
Analysts say political tensions arising from a corruption scandal that engulfed the government in late 2013 and a public battle with ally-turned-foe, U.S.-based Islamic cleric Fethullah Gulen and his followers, may deter investors.
If reforms are enacted, and Turkey exploits its special ties with the European Union to bring its institutions into line with European standards, progress can resume, Raiser said.
Turkey began EU accession talks in 2005 but they have largely stalled amid disputes over Cyprus, human rights and basic freedoms.
Raiser said plummeting global oil prices risked making investors more risk-averse, but could also help Turkey -- which relies heavily on imported energy -- shave a percentage point off its current account deficit and lower inflation.
Even the insecurity which has engulfed neighboring Iraq and Syria could present opportunities in the medium term, if Ankara can maintain regional trade links and establish itself as an energy hub, he added.
“(Assuming) the region returns to some mode of stability, Turkey would clearly be very well placed to benefit economically from that,” he said.