Turkey pledges support to US call for growth boost

Turkey pledges support to US call for growth boost

Sedat Ergin BRISBANE
Turkey pledges support to US call for growth boost

Turkish Prime Minister Ahmet Davutoğlu delivers a speech during the G-20 leaders summit held in Brisbane, Australia. Speaking with reporters after his speech, the prime minister has said Turkey supports US calls to increase demand, but insisted this did not necessarily mean abandoning financial discipline.

Turkey is backing the United States’ call to boost demand and step up growth policies, the prime minister has said during the G-20 summit, siding with the country’s trans-Atlantic ally against a Germany-led group that has advised heeding financial disciplinary risks.

A deep split of opinions among leaders of the world’s 20 largest economies have once again come to light at the G-20 leaders’ summit in Brisbane, revealing discord over fundamental policies that are supposed to steer the world to better growth and stronger trade.

Leaders have mainly aligned to support two opposite views on how to overcome challenges that are still pressuring the global economy and maintain firm growth.

The group led by U.S. President Barack Obama and British Prime Minister David Cameron has defended the need to focus on policies that will bolster demand and employment across the world, urging all countries to do what falls to them.

On the opposite side, German Chancellor Angela Merkel insists the growth-boosting measures should be moderate due to their risks on inflation and should maintain financial discipline.

In his speech during the summit, Turkish Prime Minister Ahmet Davutoğlu opted to deny the presence of such dichotomy, implying that balancing these two policies was possible, without jeopardizing one another.

However, speaking to reporters during a conversation on the sidelines of the summit, the prime minster said the U.S. stance outweighs cautious policies in the Turkish government’s priorities.

“In my speech I emphasized such a contract is not right, and it won’t yield a productive result. But then I said I agree with what Obama says,” the prime minister said.

“I really do. The United States’ approach is the right approach for our economy. There are limits to the Turkish economic growth if the demand in the global markets doesn’t rise,” he said.

Davutoğlu said the Turkish government supported calls to increase demand, but insisted this did not necessarily mean abandoning financial discipline.

“These two can exist together. The establishment of confidence in the markets is what will make these co-exist,” he said. “You can realize a structural transformation without the need to make concessions for financial discipline if there’s trust. But if there are signs of instability and distrust, or populism, your steps aimed at boosting the real sector will create inflationist pressure.”

The prime minister further claimed Turkey’s growth figures for the past 11 years, which have averaged around 5.5 percent, proved his point.

As the incoming president of the G-20, Turkey has vowed to pursue a more inclusive agenda that will put boosting development in the core of the group’s policies after it takes over the post on Dec. 1.

Turkey’s presidency also coincides with a heavy political agenda over the past year that will witness a general election, raising concerns over political instability that could thwart the country’s ability to enforce planned steps. 

Answering questions regarding the issue, Davutoğlu said it would not have any impact.
“If we were talking about these things six months ago, in March, this [question] would mean something. There is no alternative for this government inside or outside Turkey, both politically and economically, in the short and medium term. God know the long term,” the prime minister said, claiming the elections would not affect Turkey’s preparations to host next year’s summit.

Davutoğlu also underlined that the program of the 62nd Turkish government, which was formed with his prime ministry in August, has been outlined to cover the next nine years, indicating the ruling Justice and Development Party’s (AKP) determination to stay in power for at least nine more years.

“Therefore we also told the [G-20 leaders] here, ‘You should make your plans according to that,’” he said.

The prime minister also thinks his message has gained acceptance among his counterparts, claiming foreign leaders generally see “Turkey sustaining the political stability in the upcoming period.”

Turkey also expressed its frustration once more with the ongoing talks to create a free trade scheme between the U.S. and European Union.

The prime minister urged both parties to avoid steps that would “hurt the Turkish economy and violate a liberal economic understanding” by excluding Turkey from the Transatlantic Trade and Investment Pact (TTIP) process.