TEPAV states that in order to maintain the impressive growth performance, Turkey has to introduce measures that will ensure the sustainability of the rise in private investments and regard recovery in exports.

ANKARA- TEPAV stated that in order to maintain the impressive growth performance, Turkey has to introduce measures that will ensure the sustainability of the rise in private investments and regard recovery in exports and warned that otherwise, along with the fading away of the basis effect as of the third quarter, drops in growth rate will be likely.

Policy note 'Did Turkey's economy recover from the crisis?  Did we out-compete rivals?' by TEPAV Economic Policy Analyst Sarp Kalkan and Research Associate Hüseyin Ekrem Cünedioğlu is published. The note analyzed Turkey's growth performance in relation with that of 35 countries which carry out 87 percent of global production and 76 percent of world exports.

As the note revealed, Turkey achieved both a double-digit growth rate and the production level of the pre-crisis period by the second quarter of 2010. Thanks to the said recovery, Turkey ranked 12^th among 14 countries that managed to accomplish the production level before the crisis. The note said that being the only country that achieved this despite suffering from economic contraction in the first sub-period is the most important indicator of Turkey's success. But as the note underlined, pace of recovery proved quite slow compared to the 2001 crisis.

Recession in Europe affects Turkey's exports adversely

TEPAV Policy Note assessed: "The source of rapid growth of Turkey appears to be domestic consumption that helped the economy to turn around and private sector investments that buoyed as of the second quarter" and continued:

"The contribution made by consumption and investments to growth rate are 48 percent and 57 percent, respectively. Whereas domestic consumption surpassed the level before the crisis; private sector investments still stand 5.7 percent below the pre-crisis level. Despite the pleasing course of domestic consumption and investments; net exports caused a 16% contractionary impact on growth. The underlying factor here is the weak export performance due to slow recovery in foreign demand as well as the rapid increase in imports stemming from the imported intermediary input requirement of the industry.

According to the assessment of Turkey's export performance compared to the examined 35 countries, in the first sub-period Turkey ranked the ninth in terms of fall in exports with a drop by 34.6 percent. In the recovery period (second sub-period) Turkey's exports hiked by 23.9 percent. Nonetheless, the rise in exports did not reach the pace in growth. Turkey ranked the 17^th with respect to the rise in exports."

Measures needed

The note stressed that in order to maintain the impressive growth performance, Turkey has to introduce measures that will ensure the sustainability of the rise in private investments and regard recovery in exports. Underlying that it is of great importance to develop a strategic approach with the purpose to secure enduring rise in exports and improvement in investment climate the note added: "This perpetuates the need for a solid industrial strategy. Realization of the reforms which have been set back since 2007 can serve for the improvement of industry's competitiveness and the sustainability of high growth rates. Otherwise, along with the fading away of the basis effect as of the third quarter, drops in growth rate will be likely."