Turkey

73 Pages·1984·4.798 MB·English

by  OECD

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION DE COOPERATION ET OE D E V E L 0 P P E M E N T ECONOMIQUES
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TURKEY
MAY 1984
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Pursuanttoarticle 1 oftheConventionsignedinParison 14thDecember,
1960,andwhichcameintoforceon30thSeptember, 1961,theOrganisation
for Economic Co-operation and Development (OECD) shall promote
policiesdesigned:
- toachievethe highestsustainableeconomicgrowthandemployment
andarisingstandardoflivinginMembercountries,whilemaintaining
financial stability, and thus tocontribute to thedevelopment ofthe
world economy;
- to contribute to sound economic expansion in Member as well as
non-membercountries in theprocessofeconomicdevelopment; and
- to contribute to the expansion of world trade on a multilateral,
non-discriminatory basis in accordance with international obliga¬
tions.
TheSignatoriesoftheConvention on theOECD areAustria, Belgium,
Canada, Denmark, France, the Federal Republic of Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain,Sweden,Switzerland,Turkey,the United Kingdomand the United
States.ThefollowingcountriesaccededsubsequentlytothisConvention(the
datesarcthoseonwhichtheinstrumentsofaccessionweredeposited):Japan
(28thApril, 1964), Finland (28thJanuary, 1969), Australia (7thJune,
1971) and New Zealand (29th May, 1973).
TheSocialistFederalRepublicofYugoslaviatakespartincertainworkof
theOECD (agreement of28thOctober, 1961).
©OECD, 1984
Application forpermission toreproduce ortranslate
all or part ofthis publication should be made to:
DirectorofInformation, OECD
2, rue André-Pascal, 75775 PARIS CEDEX 16, France.
CONTENTS
Introduction 7
I. Current economic trends 7
Demand and output 8
Labour market 11
Prices and incomes 11
Balance of payments 15
II. Economic policy 21
1980-1982: A summary overview 21
Policies in 1983 23
III. 1984: The liberalisation programme 32
IV. Short-term forecasts 36
V. Conclusions 38
Annexes:
I. Medium-term trends of public finance 41
II. Calendar of main economic events 49
Statistical annex 55
TABLES
Text
1. Output and expenditure 9
2. Fixed capital investment 10
3. Agricultural production - Selected crops 12
4. Production of selected industrial goods 12
5. Labour market trends 13
6. Wage indicators 13
7. Agricultural support prices 14
8. Price trends 15
9. Exports by commodities 16
10. Imports by commodities 18
11. Geographic distribution of foreign trade 19
12. Balance of payments 20
13. Consolidated budget 24
14. Consolidated budget revenues 25
15. Financial accounts of the operational State Economic Enterprises 26
16. Money and credit 27
17. Central Bank credits 28
18. Selected interest rates 29
19. Forecasts for 1984 37
20. Comparative trends of general government finance (Annex I) 43
21. State Economic Enterprises: Sectoral ratios (Annex I) 46
Statistical annex
A. National product 56
B. Supply and use of resources 57
C. Agricultural production 58
D. Industrial production 59
E. Prices 60
F. Imports by commodities 61
G. Exports by commodities 62
H. Balance of payments 63
I. Money and banking 64
J. Workers' remittances by months 65
K. Dollar exchange rate of the Turkish Lira 66
DIAGRAMS
1. Real effective exchange rate 17
2. Domestic credit 30
3. Monetary aggregates 30
4. Public sector borrowing requirement (Annex I) 42
5. Central government accounts (Annex I) 44
6. State Economic Enterprises ratios (Annex I) 45
7. Savings and investment (Annex I) 47
BASIC STATISTICS OF TURKEY
THELAND
Area(thousandssq.km) 781 Populationofmajorcities, 980
Agriculturalarea(thousands<q.km) 280 (I000inhabitants):
Forests(thousandssq.km) 202 Istanbul 4871
Ankara 3196
Izmir 1969
THEPEOPLE
Population, 1982,thousands 46312 Labourforce, 1982thousands 18081
Numberofinhabitantspersq.km, 1981 59 Civilianemployment 15467
Annualaveragerateofchange Agriculture,forestry,fishing 9481
ofpopulation(1975-1980) 2.3 Industry 1855
Construction 593
Services 3538
PRODUCTION
GNP, 1982(TLbillion) 8735 OriginofGDP, 1982(percent):
Perhead(US$) 1 179 Agriculture,forestry,fishing 20.7
Grossfixedinvestment, 1982 Industry 27.0
(TLbillion) 1647 Construction 4.4
PercentofGNP 18.8 Services 47.9
Perhead(US$), 1981 22.2
THEGOVERNMENT
Publicconsumption, 1982 Publicdebt, 1982(percentofcentral
(percentofGNP) 10.8 governmentcurrentrevenue)
Centralgovernmentcurrentrevenue, Internal 3.3
1982(percentofGNP) 20.1 External 6.1
LIVINGSTANDARDS
Electricityproduction, 1982, Illiteracyrate, 1980,
kWhperhead 543 percentofpopulationaged6ormore 46
Passengercars, 1982, Schoolattendancerates, 1982,
per 1000inhabitants percentofpopulationaged7-18 51
Telephones, 1982,per I000 Centralgovernmentexpenditureon
inhabitants 30 educationperhead, 1982,USS 9
FOREIGNTRADE
Commodityexports, 1982 Commodityimports, 1982
(percentofGNP) 10.6 (percentofGNP) 16.2
Mainexports(percentoftotalexports): Mainimports
Cotton 5.2 (percentoftotalimports):
Tobacco 6.1 Machineryandequipment 19.3
Fruitandvegetables 11.3 Transportequipment 6.8
Livestock,fish,wool 7.2 Basemetals 8.6
Textiles 18.4 Oil 41.7
WORKERS'REMITTANCES
(USS million)
1982 2171 1983 1 554
THECURRENCY
Monetaryunit:Turkishlira Currency!unitperUSS,
averageofdailyfigures:
1982 160.94
1983 223.80
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
ThisSurveyisbasedontheSecretariat'sstudypreparedfor
theannualreviewofTurkeyby theEconomicandDevelopment
ReviewCommitteeon 4thApril 1984.
Afterrevisionsinthelightofdiscussionsduringthereview,
final approval ofthe Surveyforpublication was given by the
Committeeon 11th April1984.
INTRODUCTION
Economie performance in 1983 did not come 'up to earlier expectations. GNP
growth which had exceeded 4 per cent both in 1981 and 1982 fell to a little over
3 per cent, due mainly to a decline in agricultural output and a slowdown in growth
of exports of goods and^ services. On the other hand, total domestic demand rose
faster than production, principally because of a strong increase of consumption. In¬
flation, which had steadily fallen in recent years, reaccelerated to a year-on-year
rate of some 40 per cent by the end of the period as tight fiscal and monetary
policies were relaxed. Exports in dollar values stagnated compared with 1982. This
was in part a consequence of the appreciation of the dollar against other currencies,
but it also reflected weaker foreign demand, notably by oil-producing countries and
price competition. Remittances by Turkish workers abroad fell sharply. As a result
of these and some lesser factors influencing balance-of-payments performance, the
current account deficit which had been reduced to $ 1.2 billion in 1982 rose to
$ 2.1 billion last year. The higher current external deficit was financed by increased
short- and medium-term capital inflows, including syndicated Euroloans.
Following a change of Government in December 1983, a new economic pro¬
gramme was introduced which led to some tightening of fiscal and monetary policies,
with the aim of reducing inflationary pressures and redressing the balance of payments.
The main purpose of the government programme, however, is to speed up the process
of exposing the economy to market forces and international competition, thus creat¬
ing the conditions for- médium-term viable growth. Major reorganisation of the
government administration has been introduced, together with far-reaching liberalisation
of the trade and foreign exchange regimes.
The present survey examines current economic trends in Part I, and fiscal and
monetary policy in Part II. The new economic programme is discussed in Part III,
followed by a forecast of economic trends in 1984 (Part IV). Policy conclusions
are summarized in Part V.
I. CURRENT ECONOMIC TRENDS
As pointed out in previous Economic Surveys, the analysis of short-term trends
of the Turkish economy is made difficult by.problems of statistical information, which
persist despite the efforts made to improve the systematic collection and publication
of data. Subject to this reservation, it appears nevertheless that performance in 1983
was somewhat different from that of the 1980-1982 period, when stabilization
policies enabled a reallocation of resources towards exports and hence led to a marked
improvement of the balance of payments and a noticeable reduction in the rate of
inflation. Partly as a result of some relaxation of policies, domestic demand growth
and inflation accelerated in 1983, while export earnings stagnated and ;the external
current account deficit widened.
Demand and output
The rate of growth of total domestic demand (volume) accelerated from 2.8
per cent in 1982 to 4.3 per cent in 1983 (Table 1). Private consumption rose by 4.7
per cent, compared with 4.2 per cent per annum in the previous year. In the
absence of any direct observations, estimates of households' spending are always
subject to great uncertainty. There are, however, a number of factors that point
towards buoyant consumption expenditure in 1983. Available information suggests
that nominal wages increased faster than inflation. The purchasing power of wage-
earners was also boosted by the lowering of income tax rates. Furthermore, the accel¬
eration of inflation in the second half of the year probably resulted in a real increase
in income of the self-employed, particularly in the services sector. Finally, the re¬
duction in January and June of interest rates on time deposits, which in the absence
of a developed capital market constitute a popular saving instrument for households,
probably triggered a fall in the personal saving rate. The firm trend of consumption
is confirmed by strong increases in the production of consumer durables, particularly
television sets and passenger cars.
The growth of government consumption has been estimated at 1 per cent in
real terms. This growth rate roughly corresponds to the increase in civil service
employment, but it should be treated with caution because of problems attached
to the estimation of real non-wage expenditure. Public sector gross fixed capital
formation advanced at a very moderate rate (1.9 per cent), somewhat less than in
1982. It should be noted that while a sharp fall was observed for central government
investment as the authorities struggled to control budget expenditure, investment of
SEEs increased considerably in real terms.
Following sharp falls between 1977 and 1981, private fixed investment recovered
in 1982 (5.4 per cent); apparently the rise was concentrated in firms that were able
to reorient their activity towards exports, thus benefiting from subsidised credits
(Table 2). A further increase in private investment (4.8 per cent) took place in 1983.
However, with the rise in exports levelling off, export-oriented industries no longer
played a leading role. Hence, investment in manufacturing is estimated to have
increased by only 1 per cent despite some increase in capacity utilisation. On the
other hand, investment in transportation seems to have progressed rapidly, partly
due to investment incentives granted in order to aid international road haulage and
shipping. A modest recovery has also begun in housebuilding, albeit from a very low
level, possibly as a result of falling real interest rates. On the whole, despite the
positive growth of the last two years, private investment in constant prices is still
about 30 per cent below the level of 1977. Private investment is probably still
inhibited by the difficult financial position of many firms partly resulting from the
tight monetary stance of 1980-1982, despite the fall in real interest rates through
most of 1983.
Stockbuilding contributed to the acceleration of total domestic demand. Public
sector inventories fell as sales of cereals became necessary following bad harvests and
current stockpiles were run down owing to disruptions in production caused by energy
shortages; but this was more than offset by increases in oil stocks in anticipation of the
Table 1. Output and expenditure
1982 Percentagevolumechange
Average volume change
Current prices over previous year
TL As per cent 1973-1977 1978-1980 1981 1982 1983'
billion of GNP/GDP
GNP at market prices 8735.1 100.0 6.5 0.5 4.1 4.6 3.3
Foreign balance1 -187.7 -2.1 (-1.1) U.l) (2.4) (1.7) -1.0)
Total domestic demand 8922.8 102.1 7.6 -0.6 1.6 2.8 4.3
Fixed capital investment 1 646.9 18.8 10.5 -7.4 1.7 3.4 3.0
Public 1 005.5 11.5 13.4 -4.2 9.4 2.2 1.9
Private 641.4 7.3 7.1 -12.5 -8.8 5.4 4.8
Stock changes1 127.7 1.5 (0.6) (0.6) (0.8) (-1.0) (0.4)
Consumption 7 148.2 81.8 6.2 0.1 0.6 3.9 4.3
Public 939.4 10.8 11.2 2.8 0.8 2.1 1.0
Private 6208.8 71.0 5.3 -0.5 0.6 4.2 4.7
GDP at factor cost 8 107.2 100.0 7.1 0.9 4.7 4.3 3.8
Agriculture 1 678.8 20.7 3.2 2.4 0.1 6.4 -0.3
Industry 2 191.5 27.0 9.7 -1.8 7.6 4.6 7.6
Mining 170.8 2.0 15.9 -1.9 0.2 -5.8 -6.1
Manufacturing 1 812.8 22.4 8.8 -2.5 8.7 5.1 9.5
Energy 207.9 2.6 13.4 5.4 5.9 11.6 3.7
Construction 357.1 4.4 8.6 3.0 0.4 0.5 0.6
Other 3 879.8 47.9 7.8 1.1 6.3 3.6 4.4
GNP price deflator 21.5 70.9 41.8 27.1 27.5
1. Contribution to GNP growth.
2. Provisional.
Sources: StatePlanningOrganisationandState Institute ofStatistics.