Turkey’s economy faring better than world, Europe: Erdoğan

ISTANBUL

Turkey’s economy fares better than the world economy and outperforms Europe, despite many neighborhood risks, President Recep Tayyip Erdoğan has said, again stressing that interest rates must be cut further to boost investments.

“Turkey’s economy is in a much better situation than the global average, especially Europe, despite the many risks around. Our country is geographically proximate to many crisis regions in the Middle East, North Africa, the Caucasus, and the Black Sea. All developments in our neighbors Syria and Iraq directly affect us,” Erdoğan said during a speech at the Capital Markets Congress in Istanbul on Nov. 4. 

“I then said the [global financial crisis of 2008-09] would only slightly touch our economy. Although some people undervalued my words, our economy reached record high growth rates in the subsequent period, excluding 2009. Our economy grew an average of 4.7 percent between 2003 and 2015. Despite a series of serious problems in the last three years, our economy achieved growth above the world average. For instance, we closed 2015 with 4 percent growth, despite two elections and serious terror attacks,” Erdoğan said. 

He particularly referred to Ankara’s determination to continue with a series of mega infrastructure projects, stressing that key projects have recently opened even after the failed July 15 military coup attempt. 

“Turkey has managed to offer attractive opportunities to international investment companies and to strengthen its banking system. This enabled us to not face any problems in creating financing for these investments. Turkey has big targets; we need to think big,” Erdoğan said, adding that the Turkish authorities have moved to facilitate local and foreign investors’ access to financing sources.  

The president, known as a fierce critic of high interest rates, also noted said it is much fairer and more sustainable to “earn money from investments rather than making money from interest rates.” He said rates are still too high in Turkey and capital markets’ instruments should play a big role in cutting rates.

“In the United States, interest rates were 0.25 percent until recently. They are about 0.5 percent now. In Europe, rates are between 0.5 and 1.5 percent. The rates are negative in Japan … But in Turkey interest rates are still very high, even hitting 17 percent. How can investors enter into this market amid such high rates?” Erdoğan said. 

“The global financial system, which is based on interest rates, needs to be shifted to a new orbit through a series of fairer instruments, such as sukuk [Islamic bonds] … It is much fairer and more sustainable to earn money from investments than making money from rates,” he added.

Erdoğan also said a newly-established sovereign wealth fund would play a key role in creating financing for investments.

“I believe that the financing sources offered by capital markets will exceed bank loans very soon,” he added. 
The Prime Minister’s Office had stated earlier this week that the heads of Turkey’s biggest banks had promised the government that they will “support economic growth,” following repeated calls from Ankara for cheaper credit.

The trend of Turkish banks lowering their interest rates must continue, Deputy Prime Minister Nurettin Canikli said at the same meeting as Erdoğan.