The economy may recover from the present economic crisis in 1995, says the OECD in its half-yearly economic outlook published on 30 June. Economic growth could return to about 4.5 per cent for the year compared with the 0.6 per cent expected for 1994.
The present economic crisis will halt growth and increase inflation, according to the report. The OECD makes no specific forecast of inflation but according to the government’s commitments to the IMF, inflation will decline to 20 per cent in 1995 from the 117.8 per cent registered in consumer terms in the 12 months to the end of May.
The OECD does, however, say that the current account deficit might narrow to around 2.5 per cent of gross national product (GNP) in 1994 and 1995, compared with 5.3 per cent in 1993. The government’s target is a near- balanced current account in both years. The OECD says recent trends indicate a fall-off in tourism revenues. Bomb attacks on tourist resorts by the Kurdish Workers Party (PKK) are deterring visitors (MEED 8:7:94).
The OECD outlook also notes that special interest groups might impede the implementation of the government’s austerity programme, which has been endorsed by the IMF. Such obstruction could prolong current instability in the markets and economic uncertainty generally, resulting in lower output and higher inflation.