Critical work left after economic crisis: Deputy PM Babacan

WASHINGTON - Anadolu Agency

CİHAN Photo

Critical work remains ahead despite the world’s emergence from the depths of the global economic crisis, Turkish Deputy Prime Minister Ali Babacan has said at an economic gathering in Washington.

“Although the worst may be behind us, developments are not yet satisfactory. Structural reforms are missing, making the global economy perform lower than its potential,” Babacan said on April 16.

The global financial crisis of 2007-2008 was the worst since the decade-long Great Depression of the 1930s, with governments - particularly in Europe and Japan - still struggling to recover.

“The global economy has not yet fully recovered,” Babacan said, noting that after the financial crisis, the G-20 emerged “as the main platform” for dialogue on global economic and financial issues. Turkey assumed the G-20 presidency last December, vowing to fight global inequality.

“The financial sector is now looking better than it used to. Although we cannot say it has fully recovered, it is at least in a recovery stage. Now it is time to refocus on the social and environmental aspects of our overall economic policies,” added Babacan, who is seen as one of the key figures steering the Turkish economy.

Turkey, as the chair of the G-20, has promoted Islamic finance because of its additional financial instruments with less uncertainty and shared risks, he said. 

“As the G-20 chair, we are highlighting the merits of the Islamic finance, in the first ministerial communique which we issued in February,” Babacan said, referring to the way corporations and banking institutions in the Muslim world raise capital in accordance with Sharia, or Islamic law.

Babacan also attends OECD report meeting

Babacan also attended a meeting introducing new Organization for Economic Cooperation and Development (OECD) reports about the importance of diversified funding for small and medium-sized enterprises (SMEs).
Using Turkey as an example, Babacan said SMEs employ most of Turkey’s workforce.

“Seventy-five percent of our employment and 60 percent of our exports come from SMEs,” Babacan said, adding that while essential for jobs, SMEs need to broaden their sources of financing in order to become more stable.

“In many countries, at least 50-70 percent of the employment actually comes from SMEs,” he said.
The reports by the OECD analyzed SMEs in 34 countries and concluded that “alternative funding options must be developed and promoted to support investment.”

Babacan presented the reports in Washington, alongside OECD Secretary-General Jose Angel Gurria, who had a rather pessimistic outlook on SME financing.

“Small and medium-sized enterprises play a vital role in driving economic growth and creating jobs, but access to finance for these firms will remain a challenge for years to come,” Gurria said. 

Babacan, along with roughly 13,000 other attendees, is in Washington for the annual IMF/World Bank Spring Meetings.

Approximately the same number, along with major world leaders, are expected to attend the G-20 Leaders’ Summit in Turkey’s southwestern coastal province of Antalya in November 2015.