Deputy PM Babacan: Turkey needs balanced growth
Business |
Deputy Prime Minister Babacan says recent growth rates have been in line with targets but country needs balanced growth.
A top Turkish official said Tuesday that the country's economic growth this year will be between 3 and 4 percent, generally in line with year-end targets.
But the country needs sustainable growth, said Ali Babacan, the deputy prime minister for the economy.
The picture is not bad but there is a need for balanced growth," Babacan said. "Turkey needs to make intensive efforts on this."
He said he was referring to growth that would be sustainable over the long term. He spoke on the second day of the fifth Istanbul Finance Summit.
"The IFS has become an event where experts are discussing problems of Turkey and the region and are seeking solutions for them," Babacan said, referring to the summit by its initials.
Turkeys priorities in the coming period will be to reduce its current account deficit and inflation, which was 9.54 percent in August of this year, he said.
"Both indicators are high and need to be resolutely reduced, he said.
He noted that Turkey's growth rate of between 3 and 4 percent was well above that of some countries in Europe.
Turkey was Europe's fastest-growing country last year and it probably will be again this year, he said.
In order to achieve sustainable, high-quality growth, the government needs to continue with structural reforms in all areas, Babacan said.
He said the U.S. Federal Reserve might exercise influence over developing economies with its monetary tightening, which is expected to be launched next year by increasing interest rates -- a move he said the European Central Bank might counter.
"In the coming period, we will see a more active European Central Bank in response to the very slow and volatile recovery in Europe," Babacan said.
He said he hoped the European Central Bank's expansionist steps would balance the Fed's money-tightening moves.
Further monetary easing in Europe would mean a stronger Turkish lira against the euro. But the lira is expected to lose strength against the dollar following a possible interest rate rise in the U.S., which is recovering economically.
The European Central Bank cut its benchmark interest rate 10 basis points on Sept. 4 to stimulate the eurozone economy, which shows signs of deflationary risks.
Babacan also stressed the importance of Islamic finance, since the monetary crisis in 2008-09 proved the reliability of the non-interest finance model based on "partnership culture" and "sharing a common fate."
"The same issue was proven to be true by IMF reports as well," Babacan added, referring to the International Monetary Fund.
Turkey aims to introduce new financial instruments as part of its economic expansion plan. Sukuk, a funding system that works with non-interest bonds structured with Islamic laws, is the most attractive model for Turkish economic bosses.
The Istanbul Finance Summit was first organized in 2010 to contribute to making Istanbul a regional financial hub. It has hosted leading epresentatives of global financial markets and senior executives from financial institutions from North America, Europe, the Gulf region and East Asia.
The theme of the summit is innovative finance. Other topics include investment banking, venture capital funds, angel investment, innovative tools and infrastructure financing methods and financial centers.
The Turkish government showed great interest in the two-day summit. Along with Babacan, Finance Minister Mehmet Simsek participated, as well.
It is sponsored by the Turkish Central Bank, Borsa Istanbul and the Secretariat of the Treasury. The global communications partner for the second year is Anadolu Agency.
But the country needs sustainable growth, said Ali Babacan, the deputy prime minister for the economy.
The picture is not bad but there is a need for balanced growth," Babacan said. "Turkey needs to make intensive efforts on this."
He said he was referring to growth that would be sustainable over the long term. He spoke on the second day of the fifth Istanbul Finance Summit.
"The IFS has become an event where experts are discussing problems of Turkey and the region and are seeking solutions for them," Babacan said, referring to the summit by its initials.
Turkeys priorities in the coming period will be to reduce its current account deficit and inflation, which was 9.54 percent in August of this year, he said.
"Both indicators are high and need to be resolutely reduced, he said.
He noted that Turkey's growth rate of between 3 and 4 percent was well above that of some countries in Europe.
Turkey was Europe's fastest-growing country last year and it probably will be again this year, he said.
In order to achieve sustainable, high-quality growth, the government needs to continue with structural reforms in all areas, Babacan said.
He said the U.S. Federal Reserve might exercise influence over developing economies with its monetary tightening, which is expected to be launched next year by increasing interest rates -- a move he said the European Central Bank might counter.
"In the coming period, we will see a more active European Central Bank in response to the very slow and volatile recovery in Europe," Babacan said.
He said he hoped the European Central Bank's expansionist steps would balance the Fed's money-tightening moves.
Further monetary easing in Europe would mean a stronger Turkish lira against the euro. But the lira is expected to lose strength against the dollar following a possible interest rate rise in the U.S., which is recovering economically.
The European Central Bank cut its benchmark interest rate 10 basis points on Sept. 4 to stimulate the eurozone economy, which shows signs of deflationary risks.
Babacan also stressed the importance of Islamic finance, since the monetary crisis in 2008-09 proved the reliability of the non-interest finance model based on "partnership culture" and "sharing a common fate."
"The same issue was proven to be true by IMF reports as well," Babacan added, referring to the International Monetary Fund.
Turkey aims to introduce new financial instruments as part of its economic expansion plan. Sukuk, a funding system that works with non-interest bonds structured with Islamic laws, is the most attractive model for Turkish economic bosses.
The Istanbul Finance Summit was first organized in 2010 to contribute to making Istanbul a regional financial hub. It has hosted leading epresentatives of global financial markets and senior executives from financial institutions from North America, Europe, the Gulf region and East Asia.
The theme of the summit is innovative finance. Other topics include investment banking, venture capital funds, angel investment, innovative tools and infrastructure financing methods and financial centers.
The Turkish government showed great interest in the two-day summit. Along with Babacan, Finance Minister Mehmet Simsek participated, as well.
It is sponsored by the Turkish Central Bank, Borsa Istanbul and the Secretariat of the Treasury. The global communications partner for the second year is Anadolu Agency.
