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Today's Zaman

Derviş warns Turkey: Increase savings for sustainable growth

4 May 2010, Tuesday /TODAY’S ZAMAN
The possibility of Turkey achieving an average annual growth rate in gross domestic product (GDP) of 7-8 percent if it retains current levels of savings, which are hovering at around 17 percent of GDP, is low, Kemal Derviş, vice president and director of Global Economy and Development for the Brookings Institution, has said.

“Turkey needs to increase its national savings rate to ensure sustainable growth in the long term and avoid encountering new problems,” he argued.

Speaking to the Anatolia news agency after attending a conference titled “The New Phase of Globalization: Challenges and Opportunities,” organized by the İstanbul Center in Atlanta on Monday, Derviş said the Turkish economy seems to be rapidly recovering from the adversities of the global economic crisis. Acknowledging the Turkish banks’ success despite hurdles imposed by the global crisis, he said the banks’ strong capital structure was very helpful for them in thwarting the harsh effects of the financial meltdown.

Derviş did, however, assert that the banks have been struck by the problem of a lack of sufficient savings to fully fuel the reinvigoration of the Turkish economy. “Turkey may compensate for the low savings rates in the domestic economy and ensure a high investment volume by attracting capital from abroad,” he noted, adding that it must devise new instruments with maturity dates of more than 12 months to bring in international capital and increase domestic savings.

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