- 4. The estimates show a slowdown in potential output growth since before the global financial crisis. For 2007–20 the estimate of potential GDP growth using the multivariate filtering technique gives similar results as the trend GDP growth rates obtained from a simple Hodrick-Prescott (HP) filter using only data on real GDP. Both approaches show that potential output growth slowed to 3 percent in 2009, then rebounded to around 4 percent from 2010–13 (see text chart), and slows to 3–3 percent from 2014. However, estimates for future potential growth rates are highly sensitive -6 -4 -2 Actual GDP growth MVF HP filter Estimates of Potential Output Growth (Percent) Sources: Staff estimates Staff projections TURKEY INTERNATIONAL MONETARY FUND 61 to staff’s projections for actual real GDP growth, which show medium term growth of about 3 percent. For the period 2003–06, the HP filter shows about one percentage point higher potential output growth rates compared to the MVF approach.
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- 6. In the early 2000s potential output growth was strong and driven by high TFP growth.
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- 7. During the mid-2000s, potential output growth remained high but its composition shifted from TFP growth to capital growth. Investment in productive capital almost doubled as a share of GDP and reached 15 percent of GDP in 2005–06; capital growth went from contributing percent in 2003 to over 3 percent in 2007–08. As the domestic savings rate did not increase As a measure of productive capital we use private and public investment in machinery and equipment from the national accounts data (i.e., construction investment is excluded).
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Alp B., Yalcin C., 2015, Liability Dollarization and Growth Performance of Non-Financial Firms in Turkey, Working Papers 1501, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
Aydin H., Kaplan C., Kesriyeli M., Ozmen E., Yalcin C., Yigit S., 2006, Corporate Sector Financial Structure in Turkey : A Descriptive Analysis, Working Papers 0607, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- From 2001 to 2004, potential output growth increased from 3 percent to 5 percent. Capital growth was low as result of a low level of investment in productive capital at around 9 percent of GDP2 . And with the contribution from potential employment also limited in those years, the main driver of the higher potential growth was TFP growth, which contributed 3–4 percentage points. However, part of the reason for the strong TFP growth following the 2001 crisis was also that capacity utilization—which is not taken into account explicitly and therefore included in TFP—increased strongly from 70 percent in 2001 to 80 percent in 2004.
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Hulagu T., Yalcin C., 2014, Turkiye’de Firmalarin Yabanci Para Borclulugu ve Kur Riskine Iliskin Mikro Degerlendirmeler, CBT Research Notes in Economics 1413, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- International Monetary Fund, Global Financial Stability Report, 2015, Chapter 3, Annex 3.1. Emerging Market Corporate Leverage: Data and Empirics, Corporate Leverage in Emerging Markets—A Concern?, International Monetary Fund.
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Kesriyeli M., Ozmen E., Yiğit S., 2011, Corporate Sector Liability Dollarization and Exchange Rate Balance Sheet Effect in Turkey, Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4741–4747.
Ozmen E., Sahinoz S., Yalcin C., 2012, Profitability, Saving and Investment of Non-Financial Firms in Turkey, Working Papers 1214, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Period Potential growth Labor Capital TFP 2002-03 4.2 0.4 0.4 3.4 2004-05 5.0 0.3 1.8 3.0 2006-07 4.5 0.4 3.2 0.9 2008-10 3.6 1.1 2.3 0.3 2011-14 3.7 1.3 2.7-0.4 2015-20 3.3 0.7 2.0 0.7
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- TURKEY 62 INTERNATIONAL MONETARY FUND during these years, the higher level of investment in real productive capital was financed solely from abroad—the current account thus went from balance in 2002 to a 6 percent of GDP deficit in 2006.
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- With potential employment growth roughly stable from 2002–07, the sharp increase in the contribution from capital growth implies that the contribution of potential TFP growth slowed in the run-up to the global financial crisis.
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World Bank Synthesis Report, 2011, Turkey Country Economic Memorandum, Sustaining High Growth: The Role of Domestic Savings, World Bank.
Yildirim N., Tastan H., 2012, Capital Flows and Economic Growth across Spectral requencies: Evidence from Turkey, Working Papers 2009/2, Turkish Economic Association.