Reform needed for growth in Turkey, says top official
Business |
Deputy PM says Turkey must make vital economic and political reforms in the coming months to increase a sustainable growth rate.
Turkey will make vital economic and political reforms in the coming months to increase its growth rate, a senior minister has said. Deputy PM with responsibility for the economy, Ali Babacan, told Bloomberg television on Friday that "if Turkey, structurally, does not take very radical steps, its economy may be trapped in the range of 3-4 percent growth rate." The countrys economy has continued on its growth path for the 17th consecutive quarter, expanding by 4.4 percent in the October-December period of 2013.
Turkish GDP is estimated to have increased by four percent in 2013, compared with 2.1 percent in 2012. Babacan said Turkeys oil and natural gas imports were causing the current account deficit to remain high. The current account deficit in 2013 reached US$65 billion from US$48.5 billion in 2012, an increase of 34 percent. Babacan said: "We prefer more foreign direct investment rather than borrowing."
Turkey relies on imports for three quarters of its energy consumption and it is these imports that make up the majority of the country's deficit. However, Turkey is trying to diversify its energy sources by investing heavily in hydroelectricity and nuclear power; three nuclear plants are currently in various stages of construction. In 2013, Turkey ran a foreign trade deficit of US$99.78 billion, up by 18.7 percent from the previous year, according to the national statistics agency, TurkStat.
Babacan stressed that if drastic steps were not taken, Turkeys growth rate could encourage an unsustainable current account deficit. "We consider that the current account deficit in Turkey of more than 4-5 percent is a risk. With the current structure, Turkey's 4-5 percent growth rate will produce 4-5 percent current account deficit. Turkey needs to concentrate on the structural side," he said.
The minister added: "Both political and economic reforms are required in the country We need take some steps in political area for a better functioning democracy and the implementation of fundamental rights and freedom in Turkey
"Turkey still is not a first-class democracy. In order to become a first-class democracy, it needs to continue democratization steps."
In terms of reforms, Babacan stressed the need for an independent, impartial judiciary: "For a developed economy and democracy, the rule of law is supposed to be dominant in the country."
Babacan added that Turkey posted a higher economic growth rate than any European nation last year but that it was early to discuss Turkey's growth rate target of this year, which was four percent.
Turkish GDP is estimated to have increased by four percent in 2013, compared with 2.1 percent in 2012. Babacan said Turkeys oil and natural gas imports were causing the current account deficit to remain high. The current account deficit in 2013 reached US$65 billion from US$48.5 billion in 2012, an increase of 34 percent. Babacan said: "We prefer more foreign direct investment rather than borrowing."
Turkey relies on imports for three quarters of its energy consumption and it is these imports that make up the majority of the country's deficit. However, Turkey is trying to diversify its energy sources by investing heavily in hydroelectricity and nuclear power; three nuclear plants are currently in various stages of construction. In 2013, Turkey ran a foreign trade deficit of US$99.78 billion, up by 18.7 percent from the previous year, according to the national statistics agency, TurkStat.
Babacan stressed that if drastic steps were not taken, Turkeys growth rate could encourage an unsustainable current account deficit. "We consider that the current account deficit in Turkey of more than 4-5 percent is a risk. With the current structure, Turkey's 4-5 percent growth rate will produce 4-5 percent current account deficit. Turkey needs to concentrate on the structural side," he said.
The minister added: "Both political and economic reforms are required in the country We need take some steps in political area for a better functioning democracy and the implementation of fundamental rights and freedom in Turkey
"Turkey still is not a first-class democracy. In order to become a first-class democracy, it needs to continue democratization steps."
In terms of reforms, Babacan stressed the need for an independent, impartial judiciary: "For a developed economy and democracy, the rule of law is supposed to be dominant in the country."
Babacan added that Turkey posted a higher economic growth rate than any European nation last year but that it was early to discuss Turkey's growth rate target of this year, which was four percent.
