“Despite it being unrealistic to expect the government to be able to stop the current recession, the economic forecast I read suggests the Turkish economy will pick up quite well next year and that the government’s policies are successful,” said the director of the London School of Economics (LSE), Sir Howard Davies, in an interview with Today’s Zaman on Thursday.
On an agreement with the International Monetary Fund (IMF), Sir Howard stated: “Obviously the big question here is whether the deal with the IMF is really necessary for Turkey. I do not think it is essential for the Turkish economy, but I think it might be helpful, given the amount of borrowing for the next year and the fact that the banks haven’t got a huge capacity of reserves. So, some additional capital inflow from the fund could be helpful.”
Sir Davies defined the government’s efforts to deal with the economic crisis as successful, adding that it is not realistic to expect the ruling AK Party government to prevent recession. Davies also stressed the importance of not losing the spirit of reform after the economy recovers |
When asked whether the credibility of the IMF would decrease if Turkey were to achieve a recovery without any contribution from the fund Davies denied the suggestion. “The IMF has carried out programs with a number of countries where it has been reasonably successful. For example, Hungary -- the IMF has done useful things in the crisis and I think whether it does or not in Turkey is not a big deal for the IMF.”
He also talked about his proposal for precautions that should be taken to stop another global crisis and underlined more comprehensive approaches to deal with global problems. Davies expressed concern that despite suggestions for reform being on the global agenda, after the economic crisis, they ought not be ignored.
“There are two dimensions to this issue, one is the shape of the economic growth and the other is financial regulation. For the first one I am concerned that as we emerge from the recession, not much has changed and we still have China’s huge exports and the US still importing and US consumers still spending. So I think that needs certain global action to try to correct the global imbalances. I hope these global imbalances will remain on the international agenda. I am hoping they will remain on the agenda and China being brought inside the decision-making bodies now will be helpful for other countries like Brazil and Turkey to be involved in the decisions [later],” he asserted.
He went on to touch on financial regulations and their risks stating that the risk is that the world will overreact now. The system needs more capital, more regulation but it is ends up with banking so safe that they can’t perform their economic function which is lending money.
“Now we have more capital with more regulation than we had in the past. But to the degree we have now, there is a huge amount of reserve which is not being lent to anybody. There is not much point in that. That debate needs to be brought back but that will probably happen after the economic recovery,” Davies added.
Referring to the remarks in his speech at Bahçaşehir University, Davies pointed out the potential changes in world politics after the change in the center of economic growth, saying most of the intellectuals and pundits are of the opinion that the “settlement” in 1945 in the wake of World War II is no longer sustainable and adaptable to the current world system.
In his lecture, the veteran economist stressed that the post-war era had been dominated by the economic and political power of the Western world, namely west European countries and North America, thus the previous center of economic growth fell between these two regions. In contrast, with the rise of China as a remarkable economic power, it became clearly evident that world’s financial construction is in deep need of reform.
Benzer Haberler 
National
