World Economy

Higher Savings Key to Turkish Growth

Higher Savings Key to Turkish Growth
Higher Savings Key to Turkish Growth

Increasing the savings is necessary to accelerate Turkish growth, Central Bank Governor Erdem Basci said, adding that the government will unveil a comprehensive action plan for maintaining “balanced growth,” Anadolu news agency reported.

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

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

The low level of domestic savings is seen as 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.

Basci, however, said the government will announce Turkey’s Tenth Five-Year Development Plan, including more than 200 measures 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 period.

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, Basci 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.