TURKEY

TURKEY After the boom, the bust. Turkey's economy grew rapidly from 1995 until mid-1998. But following Russia's default last August, foreign capital fled, interest rates soared and the economy ground to a halt. The worst is probably now over, according to the OECD's latest country survey. But the outlook is pretty grim. Interest rates are being kept up to clamp down on inflation, which is expected to fall from 81% last year to 54% this year and 32% in 2000. But high interest rates are holding back growth. The OECD expects Turkey's GDP to expand by only 1.4% this year and 3.9% in 2000, compared with growth of over 7% a year in 1995-97. High rates are also undermining efforts to balance the government's books. Although the government is running a primary surplus, it had a deficit last year of over 14% of GDP once interest payments are included. The OECD thinks further reform is needed if fast growth is to resume.