Rapid growth is too risky, Babacan says

ISTANBUL - Anatolia News Agency

Deputy Prime Minister Ali Babacan says Turkey needs to be cautious.

Deputy Prime Minister Ali Babacan said that while Europe was in the throes of an economic crisis, Turkey would have to act in a very cautious

“Growth is good, but when we look deeper we see that it is based on borrowing from banks and spending that money. This year Turkey will grow about 4 percent. It will be a more sustainable, more continuous and grounded growth. Sure, you can achieve rapid growth in the short term for like six months, but the price would be too high to pay. If we are thinking about both today and tomorrow, we have to be cautious,” Babacan said.

Babacan said Turkey was growing, but so too were its citizens’ banking debts.

“If we didn’t take precautions, our banks’ loan volumes would have grown 35 percent. Our citizens’ and companies’ loan debts would have jumped from 100 Turkish Liras to 135 liras in one year. With our precautions we were able to keep loan volumes at 25 percent,” Babacan added. He said that this year loan volumes would be in the 15 percent range. He noted that last year 45 percent of families were spending more than their monthly salaries. He said fast growth should not come at the expense of the government’s dependability, total wealth or the country’s social infrastructure.

‘EU overspent’

Babacan also criticized Europe’s model of overspending to stimulate the economy when their budget deficits were too large.

“We asked them where [they will] find the money to keep spending and they told us ‘we are EU countries and members of the eurozone.”