Earle, Carlton And Hughes Advises Clients To Hold Off On Investments In Turkey

Online, September 16, 2010 (Newswire.com) - ANKARA - The Investment Firm Earle, Carlton and Hughes on Wednesday praised Turkey's strong recovery from the economic crisis but advised their clients not to make direct investments in the Turkish until the Turkish financial authorities take the steps urged by the EEDC and start removing fiscal and monetary stimulus as it poses a risk to stability in the emerging market economy.

This announcement comes on the heals of OECD Secretary-General Angel Gurria's meeting with Turkish authorities in Ankara for the publication of the Paris-based club's economic survey on Turkey.

"As the recovery is now underway, the authorities in Turkey, as in other OECD countries, have to decide on the timing and pace of removing fiscal and monetary stimulus. Until these policies are firmed up we advise clients to tread cautiously in the market." The Advice Memorandum from Earle, Carlton and Hughes stated.

Like many other countries, Turkey's government stepped up spending and its central bank cut interest rates to record lows during the global crisis to stem a steep contraction in the economy, resulting in a wider budget deficit.

"As the monetary policy stance is expansionary, the recovery is firming and credit accelerates, the central bank should start normalizing interest rates before the end of 2010, conditional on a favorable economic outlook," it said.

Data this week showed Turkish gross domestic product expanded by an annual 10.3 percent in the second quarter, reinforcing expectations that the economy will grow around 6 percent for the full year. Although there is no strong evidence of exchange rate overvaluation currently, high labor costs and the loss of export market share prior to the crisis suggest price competition pressures, the OECD said, urging Ankara to focus on enhancing competitiveness.