Hi Clayton,
Turkey, just behind China, is the second fastest growing economy in the world, with a 33.5 percent cumulative increase in real GDP in the last four years.
What makes this performance even more remarkable is that it has come along with rapid disinflation to single-digit territory when energy prices hit a new peak.
Productivity revival, thanks to prudent policies and structural reforms stabilizing the macroeconomic landscape and forcing economic agents to focus efficiency, is the key factor keeping Turkey's non-inflationary growth on track, according to a report yesterday by Morgan Stanley economist Serhan Cevik.
Labor productivity, measured by output per hour worked in the manufacturing sector, accelerated to an annual rate of 8.4 percent in the last quarter of 2005 and reached 38.5 percent, on a cumulative basis, in the post-crisis period. In turn, the elevated trend productivity growth rate, pushing the economy's production frontier to a new plateau, has helped Turkey's journey towards price stability.
Disinflation has come, as expected, to a temporary halt, because of higher energy prices. The consumer price index posted a month-on-month increase of 0.3 percent in March, slightly lower than our projection but in line with the consensus estimate. Accordingly, the year-on-year inflation rate increased from 7.7 percent at the end of 2005 to 8.2 percent last month.
Thank you
Connor