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Minister Babacan: Reliance on state banks will threaten Turkey’s future
“Decisions should be made based on business principles. There isn’t a transaction that is not based on mathematical or economic principles. During this period, people complained why state banks, with their large capital stocks and liquidity, were not doling out money left and right to support the economy. Doing this may have benefits in the short-run, but at what cost? The costs will be paid by future generations. When making economic decisions, we need to make sure not to threaten Turkey’s economic future,” Babacan added.
In the opening speech of the summit, organized by Active Academy, Babacan emphasized the role that the structural strength of the Turkish financial system should play in keeping the Turkish economy stable during times of economic crisis, stating, “All of the relevant institutions put forward measures in a timely matter, and these measures are the reason our financial system is so strong.”
Additionally, Babacan noted that Turkey would be one of the countries to exit the global economic crisis more quickly but stressed the importance of the European economy in pulling Turkey out. “Europe is recovering at a slower pace compared to global trends. In the following year, we expect Europe to achieve near-zero growth. This is especially relevant for Turkey because Europe is an important export market. The faster Europe recovers, the faster our economy will recover.
Babacan noted that although some of Turkey’s problems originated from external economic developments, many arose from internal crises. Speaking on the importance of confidence in an economy, Babacan stated that production, consumption and investment would be difficult to materialize without confidence.
Babacan said he expects employment to increase, with a small decrease in the unemployment rate in 2010. “Firms are holding back on hiring and are trying to increase efficiency. If there is no global recovery in employment, however, then there will be a delay in the recovery of consumption. We therefore need to focus on increasing employment globally,” he said.
“Even with a great crisis of this magnitude and even though Turkey’s exports and consumption have shrunk, Turkey has emerged from this crisis as one of the least affected nations. From this point on we will act with caution, but also have unwavering faith in Turkey’s future,” Babacan added.
Private sector a force of growth
Ersin Özince, the president of the Turkish Banks Association (TBB) and İş Bankası, in a speech at the summit highlighted that Turkey’s potential had not changed due to the crisis and that the 2 billion people living in the region still needed the country’s entrepreneurial leadership.
Özince, stressing that Turkey’s powerful growth after 2001 was led by the private sector, noted: “We need not forget that we have to repeat this performance again. We are an economy that has had minimal government intervention, and thus our role is even more important. We need to continue on this path while enacting cooperative agreements with the government as much as possible.”
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