Higher savings key for Turkish growth: Central Bank governor

ANTALYA – Anadolu Agency

Turkish Central Bank Governor Erdem Başçı. DHA Photo

Increasing savings are needed to accelerate Turkish growth, Central Bank Governor Erdem Başçı has said, saying the government will unveil a comprehensive action plan for maintaining “balanced growth.”

“Different from many other countries, the fundamental factor that will enable growth in Turkey is increasing savings,” Başçı said, addressing the Fourth International Economy Conference held in Kemer in the southern province of Antalya on Oct. 18.

“We aim to maintain growth in Turkey through increasing savings, so the efforts will be in this direction,” he said during the meeting organized by Turkish Economy Institution (TEK).

The low level of domestic savings has been seen one of the key weaknesses of the Turkish economy, increasing the country’s dependency on foreign funds and its exposure to external shocks.

The prospects for Turkey’s economic growth both this year and next year have become gloomier, with the government this month cutting its growth forecasts to 3.3 percent from 4 percent for 2014 and to 4 percent from 5 percent for next year.

Başçı, however, said the government will announce Turkey’s Tenth Five-Year Development Plan, including more than 200 actions listed under 25 titles, as part of policies to maintain a more balanced growth.

He said all the moves would be bound by deadlines, enabling the public to track whether or not the promised actions are realized within the promised time.

The Central Bank’s top contribution to the balanced growth, meanwhile, will be maintaining price stability, which has been designated as the top duty of the institution, Başçı also said, adding that price stability could enable nominal and real interest rates to be much lower, thus paving way for higher growth.

He stressed that the risk premiums in Turkey are “still very high” and should be minimized in order to help balance growth.