Ankara: Trkiye is on track to return to sustainable growth levels by 2026 if it maintains its current monetary policies and enhances foreign investor confidence, according to an economist at the Organisation for Economic Cooperation and Development (OECD).

According to Anadolu Agency, Sebastien Turban, one of the authors of the OECD's Trkiye economic survey, emphasized that the country's current account deficit has narrowed, and inflation has decreased following a shift in macroeconomic policy in mid-2023. Turban noted that although inflation remains high, it is on a downward trend, necessitating continued fiscal and monetary tightening until inflation is under control.

Turban highlighted that achieving medium-term program objectives and maintaining the current deficit level would lead to sustainable public debt and finances. He also pointed out that Trkiye's Central Bank and fiscal institutions are committed to maintaining the current policy stance, emphasizing the importance of keeping monetary policy tight until inflation is managed effectively.

Turban remarked on the strengthened external position and increased gross reserves due to macroeconomic reforms in the past two years, with net reserves excluding swaps turning positive for the first time since early 2020. He acknowledged the reduction in reserves as a positive development.

Prior to mid-2023, Trkiye's growth was considered unsustainably high, but Turban noted that tighter policies have stabilized the economic situation. The OECD predicts a 3.1 percent growth for Trkiye's economy this year, driven by ongoing monetary and fiscal tightening, which will exert downward pressure on both inflation and growth.

Turban assessed Trkiye's potential growth rate at around 4%, indicating the maximum growth achievable without excessive inflationary pressure. Projections suggest that by 2026, Trkiye's growth will return to this potential level, alleviating inflationary pressures.

Foreign direct investment and investor perception have improved due to macroeconomic measures, with credit rating upgrades contributing to international optimism. Turban emphasized the importance of stable foreign direct investment over volatile capital flows and advocated for the continuation of current policies to build investor confidence further.

Turban concluded by stressing the significance of maintaining the current economic approach to ensure ongoing improvements in confidence and more permanent foreign investment flows.