OECD warns Turkey to reduce black economy in latest survey

After falling nearly 5% in 2009 in the wake of the global crisis, Turkey’s GDP was now expected to expand by more than 6% this year. According to the OECD report, unemployment was likely to fall markedly.

Presenting the survey in Ankara this morning, OECD Secretary-General Angel Gurría said: “Turkey should build on the positive shock it produced by emerging from the crisis with a strengthened economy. It should now finish the job by completing the fiscal architecture to consolidate its credibility.”

He explained how the task also required “implementing a number of key reforms” so that the entire business sector can benefit from the stronger economic environment.

Gurria warned, though, that Turkey’s largest export markets, notably in Europe, remained “fragile”. Strong, sustained growth would depend on Turkey “reducing further its economic vulnerabilities and stimulating labour productivity”.

Addressing the weaknesses included modernising how public finances were managed, the OECD survey showed. “Plans for well thought-out rules, transparency and comprehensive auditing must be pursued,” the OECD warned.

The survey also insisted that the Turkish economy needed “to move away from its dependence on undeclared and informal business.

“Although informality and semi-informality have helped Turkish firms maintain flexibility in a competitive international environment, they have become a trap as they slow down economic modernisation and productivity growth,” the OECD survey warned.

Reducing informality was “also crucial for improving public finances and distributing taxes more equitably”, the OECD survey on Turkey added.

Moreover, the survey recommended “reducing rigidities in the labour market to make the jobs market more flexible n areas such as severance pay, the minimum wage and temporary work”.