(MENAFN- The Journal Of Turkish Weekly) The European Commission forecast that Turkey's economy will grow faster than 24 EU member states in 2015. The commission released on Tuesday its 186-page Spring Economic Forecast, in which it estimated that Turkey's annual GDP growth is to increase from 2.9 percent in 2014 to 3.2 percent in 2015.
Turkey's GDP growth rate is expected to increase further to 3.7 percent in 2016.
GDP growth of 3.2 percent would be higher than the growth figure forecast for 24 EU Member States: the prediction is for Spain to grow 2.8 percent, the U.K. at 2.6 percent, Germany at 1.9 percent, France at 1.1 percent and Italy at 0.6 percent in the same year.
The report said that Turkey's economy would benefit from lower oil prices, and that inflation in the country is expected to decline moderately.
The revival of domestic demand should support growth.
"On the domestic side, private consumption expenditure is likely to recover from last year's sluggishness in the context of the lower oil price and stronger employment growth. The recent easing of monetary policy should also provide some stimulus to consumption through lower bank lending rates although the macro-prudential measures from 2013-14 will continue to restrain household borrowing," the report said.
Macro prudential measures are controls on credit.
The reduction in the cost of imported energy is also expected to narrow the current account deficit.
"Turkey's large current account deficit narrowed to 5.7 percent of GDP in 2014, much helped by lower imports of non-monetary gold. In 2015, the lower oil price should reduce the deficit further to a projected 4.4 percent of GDP," the report said.
However, according to the Commission, the crises in Ukraine and in the Middle East pose a risk to Turkish exports: Russia, Ukraine and Iraq are important trading partners.
"Exports will also be hurt by lower energy prices which tend to suppress growth in many of Turkey's traditional markets (Russia, Middle East)," the report said.
But employment will lag slightly behind economic growth, according to the report.
"Employment growth is expected to run somewhat below output growth consistent with relatively slow trend growth in labor productivity in recent years. Annual average unemployment is projected at around 10½ percent for the labor force aged 15-64 years, based on the assumption that the labour force will increase at around the trend growth rate of recent years," the report noted.
EU member states with a higher forecast for GDP growth than Turkey in 2015 are Ireland and Malta at 3.6 percent, Luxembourg at 3.4 percent and Poland at 3.3 percent.
Turkey is a candidate to become a European Union member state.
Turkey started its accession negotiations into the European Union in 2005. Out of 35 chapters, 14 chapters have been opened, including on financial control, taxation, company law and enterprise and industrial policy, while 17 remain blocked, and four have not been discussed.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.