UNDP head Dervis warns Turkey on inflation

"Monetary authorities have to allow a temporary upward move in inflation within reasonable limits but going beyond those limits and over loosening monetary policy could bring a resurgence of inflationist sentiment and an inflationist trend," Dervis said at an Istanbul meeting of the Turkish Industrialists' and Businessmen's Association (TUSIAD).

However, Dervis was optimistic about the global financial turbulence and said history had shown that past crises had been overcome sooner than anticipated.

"Yes, we will witness a slowdown but that will be over soon and an accelerating growth trend will again kick in for the global economy," Dervis added.

GOOD GROWTH MOMENTUM

Dervis said Turkey had a good growth momentum and added, "This growth performance was related with capacity utilization and the skill of overcoming a crisis." Turkey should have a growth rate around 7 percent between 2010 and 2015, the UNDP head said.

"Thus, the rise in employment may be 2.5 percent," Dervis said, adding it was not possible to maintain that performance with an investment rate around 22 percent.

Turkey had to allocate 26-28 percent of its national income for investments in order to maintain the growth momentum, Dervis added.