Prominent economist sees 2015 growth below 2 percent

Cansu Çamlıbel ISTANBUL

The contradictions within the government’s economic policies mean it is too difficult to even post a growth rate as low as 2 percent, prominent economist Kemal Derviş has told daily Hürriyet.

 There is a clear difference in the Justice and Development Party’s (AKP) governance in the 2003-2007 period and the 2008-2014 period, according to Derviş, who confirmed that he had agreed to join the cabinet if the opposition Republican People’s Party (CHP) was to form the government after June elections.

Turkey registered an average 7 percent growth rate in the 2003-2007 period without resorting to populist policies, said Derviş during an online interview, recalling that economy ministers Ali Babacan and Mehmet Şimşek had followed a tight fiscal policy. But in the period 2008-2014 the growth rate dropped to 3 percent and one of the reasons for this was a big drop in confidence.

“Investment is foremost an issue of confidence. All the institutions that regulate and monitor the economy need to stand equidistant to everybody; this is very important for confidence. The independence of the Central Bank, the autonomy of institutions like the Banking Regulation and Supervision Agency (BDDK) are very important,” said Derviş.

“Obviously it is the right of the government and the parliament to set the targets. But in market economics, politics do not interfere in daily decisions on the issue of which tools these targets will be met with,” he said.

The fundamental reason for the lack of investment and savings in Turkey is a lack of confidence, according to Derviş, who highlighted the fact that Turkey has become one of the countries with the lowest saving rates in the world.

Turkey is a country with great potential and hardworking people, said Derviş. “Turkey has a bureaucracy with serious knowledge and experience. Therefore, it is possible to reach at least 6 percent growth and create employment if Turkey was well governed,” he said.

“But for that, people need do regain confidence. We need to pull down our internal political feud to reasonable levels. The peace process needs to succeed. All of Turkey’s citizens should trust in the country’s future. This is the gist of the matter. For that; there must be a modern state that should monitor the economy within market rules; political contentions should not be felt at all times in economic fields. People should regain the conviction that ‘no matter who becomes a minister, no matter which government comes to power rapid growth will continue.’ Unfortunately Turkey’s economic performance is way below its potential. But it is definitely possible to have a growth rate of 5 percent in bad years and 7 percent in good years,” said Derviş.