TURKEY'S EXPORT RECOVERY TO TAKE TIME

Turkish exports have shown a mild recovery over the first two months of 2010, but two more years at least are needed for the country to recover completely, according to an economic research coordinator at Koç Holding.

Speaking Wednesday during the Turkey Trade and Export Finance Conference in Istanbul, Ahmet Çimenoğlu said it will not be particularly easy for Turkish exports to reach pre-crisis levels in 2010 because the eurozone is still Turkey's main export destination.

"There will be an increase of some 15 percent, but this will not help us attain a 5-6 percent growth rate for the economy overall," he said.

Consumer demand also remains weak, Çimenoğlu said. "Consumer demand is recovering but only very slowly. Domestic demand is unlikely to grow by even 4 percent this year. Our expectation is 3 percent," he said.

Turkey's decision not to embark on a new standby deal with the International Monetary Fund means the Treasury's borrowing requirements will be at a slightly higher level, he said.

"Without the IMF in the picture, our expectation is that loans will grow by about 12-13 percent in 2010. The Treasury's borrowing will also be at a higher level and government pressure to financial markets will still be there."

Growth expectation of 4.3 pct

Mark Thomas, chief economist at World Bank's Turkey office, said Turkey's economy is likely to grow by roughly 4.3 percent annually over the next five years.

Thomas said a 1 percent point drop in Turkey's gross domestic product growth in the future is one of the lasting effects of the global crisis on the local economy.

"The growth rates of 6 and 7 percent the Turkish economy saw prior to the crisis were not sustainable. Economic growth is likely to stand below 5 percent, at approximately 4.3 percent annually," he said.

Despite some of the optimistic statements that Turkey has begun recovering from the crisis, there is also a need to recognize the economy did experience a severe downturn, Thomas said.

"In fact, in some other regions, the downturn was not this severe. One reason [for the more severe crisis in Turkey] is that it is located at the edge of Europe and had to pay the price for frothy growth and finance that went along with that," he said.

Turkey’s GDP was hard hit by the global decline in demand and a bottleneck in bank lending, as output fell 6.5 percent on an annual basis in the last quarter of 2008 and plummeted 14.7 percent in the first quarter of last year while GDP declined 3.3 percent in the third quarter of 2009. The economy has not seen positive GDP growth since the third quarter of 2008.

Thomas said he expects the era of particularly low interest rates will likely end in the next 24 months.

"We don't expect [low] interest rates to persist forever; they will start to rise, and Turkey will have to follow suit. But these months are an opportunity for Turkey to bring down its loans," he said.

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