After a number of major international financial institutions revised Turkey's growth forecasts for 2017, the Organization for Economic Co-operation and Development (OECD) has followed suit by nearly doubling its previous estimation.

Earlier in June, the OECD raised Turkey's growth forecast for this year to 3.4 percent from 3.3 percent, on the back of a number of measures by Ankara.

However, according to the OECD's Global Economic Outlook report released yesterday, the Turkish economy was expected to grow by more than 6 percent by the end of this year.

"Economic growth is estimated to have exceeded 6 percent in 2017, driven by a strong fiscal stimulus and an export market recovery," the OECD said.

"It is projected to edge down but to stay between 4.5 percent and 5 percent in 2018 and 2019," it said, adding that, "Consumer price inflation remains far above the target and disinflation is projected to be slow."

It noted that in an environment where fiscal stimulus is scheduled to be withdrawn in 2018, strengthening business and household sentiment will be essential for maintaining growth momentum. The OECD also reported that effective progress with the announced structural reforms, fiscal transparency and disinflation goals of the Medium-Term Economic Program 2018-2020 will increase confidence and boost domestic and foreign private business investment.

The report stressed that financial vulnerabilities stay high due to the magnitude of foreign financing needs, stemming from a persistently high current account deficit. It also indicated that debt leverage in many non-financial firms has also increased considerably, limiting their capacity for additional borrowing and investment, adding that the large government credit guarantee scheme introduced in 2017 alleviated short-term financial strains and is assumed to remain in force in the next two years.

The OECD also pointed out that in order to increase resilience, the ecosystem for equity participation by domestic and international investors in firms of all sizes should be upgraded.

The report also said recovery was driven by public investment and exports.

"Growth has gathered momentum in 2017 on the back of temporary tax measures stimulating consumption and employment, massive government credit guarantees and a strong recovery in export demand. Employment has increased rapidly, but the labor force is expanding faster still, by 3 percent annually even without including the informal jobs held by refugees. As a result, the unemployment rate is around 11 percent."

Inflation forecasts upgraded

While inflation forecasts were raised from 10.4 percent to 10.7 percent this year, and from 8.1 percent to 9.9 percent for the next, forecasts for 2019 remained at 8.9 percent.

The OECD estimated core inflation, excluding food and energy, will be at 9.6 percent for this year, 9.3 percent for the next and 8.9 percent for 2019.

It also predicted that private consumption will grow by 5.5 percent this year, 5.7 percent in 2018, and by 4.6 percent in 2019. The previous forecasts this year and the next was at 4.8 and 3.7 percent, respectively.

The revision followed moves by the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD) and the EU.

The IMF upped Turkey's 2017 growth forecast by 2.6 percentage points on Oct. 10, the World Bank raised its forecast by 0.4 percentage points on Oct. 19, the EBRD lifted its forecast by 2.6 percentage points on Nov. 7 and the EU by 2.3 percent on Nov. 11.

According to the Turkish Statistical Institute (TurkStat), the Turkish economy expanded beyond forecasts in the first quarter (5.2 percent) and second quarter (5.1 percent) of this year.

Earlier, the growth rate was 5.2 percent in 2014, 6.1 percent in 2015 and 2.9 percent last year.

As noted in the country's medium-term economic program announced on Sept. 27, the Turkish government is targeting growth of 5.5 percent this year as well as through to 2020.

On Monday, President Recep Tayyip Erdoğan said it would not be a surprise if the economy grew by around 7 percent in 2017.

Meanwhile, the OECD pointed out that global economic growth was strengthening with the impact of surprising data. It projected the global gross domestic product (GDP) growth to be between 3.6 and 3.7 percent in the coming periods and expected to approach the long-term average.

However, the OECD said growth remains softer than in the past in the emerging market economies.

In the Global Economic Outlook report released by the OECD, it was noted that on a per capita basis, growth is set to improve but fall short of pre-crisis norms in the majority of OECD and non-OECD economies and that inflation is currently subdued in the major economies and is set to remain moderate.

Highlighting that the lingering effects of prolonged subpar growth after the financial crisis are still present in investment, trade, productivity and wage developments, the OECD stated in the report that some improvement was expected in 2018 and 2019, with firms making new investments to upgrade their capital stock.

"But this will not suffice to fully offset past shortfalls, and thus productivity gains will remain limited. Growth also remains softer than in the past in the emerging market economies," it added.

Having raised the GDP growth forecast for the global economy for 2017 from 3.5 percent to 3.6 percent, the report projected that the growth will stand at 3.7 percent in 2018 and 3.6 percent in 2019.

It also raised the U.S. growth forecast from 2.1 percent to 2.2 percent for 2017 and from 2.4 percent to 2.5 percent for 2018. The OECD estimated China's growth forecast for 2017 and 2018 as 6.8 percent and 6.6 percent, respectively, noting that growth in 2019 will slow down to 6.4 percent.

For Russia, on the other hand, the growth forecast was revised down from 2.0 percent to 1.9 percent for 2017, from 2.1 percent to 1.9 percent for 2018, followed by a 1.5 percent growth rate in 2019.

The OECD, which raised the 2017 forecast for the eurozone from 2.1 percent to 2.4 percent and the 2018 forecast from 2.5 percent to 2.4 percent, revised the 2017 and 2018 forecasts for Germany by 0.2 percentage points to 2.5 percent and 2.3 percent, respectively.