Economy strong enough to respond to global crises
Posted by meb at January 24th, 2008
The Turkish economy is strong enough to respond to global crises, Finance Minister Kemal Unakıtan has stated, stressing that the current economic gloom can be handled properly and without panic.
At a press conference on Wednesday, the minister provided information on economic developments in Turkey and the world in 2007 as well as the results of budget performance. Noting that Turkey has made remarkable progress in terms of macroeconomic development, Unakıtan underlined that the rate of inflation dropped, the budget deficit was reduced, interest rates fell and the debt burden was alleviated in 2007, though he nonetheless warned the private sector to pay the utmost attention to the financial situation.
Recalling that Turkey’s integration with the world economy has gained momentum since 2003, Unakıtan also stressed that financial stability was maintained in 2007 despite fluctuations in 2006.
Noting that the same situation is expected to continue this year as well, the finance minister said that 2008 would feature an increased rate of privatization, a reduction in unregistered economic activity, an increase in the diversity of financial instruments and overall improvement in the workplace and alleviation of the tax burden on labor. Unakıtan further stressed that new policies on research and development will remain in effect.
Fluctuation in foreign markets
Drawing attention to global fluctuation, Unakıtan stressed that government authorities were closely following developments and working on alternative scenarios to estimate the outcome of possible crises. Unakıtan said the recent writedowns announced by private companies and investment banks rendered the negative scenarios important. Unakıtan further said: “There is no mortgage crisis in Turkey, something witnessed in other developing countries. There is no mortgage crisis here; however, crises in other countries could affect us as well. Thank God, people are able to pay off their loans. The banking sector seems to be much consolidated and strong. The sector stands firm owing to the reforms.”
Recalling that the Turkish economy is strong enough to withstand global crises, Unakıtan asserted that foreign investors were taking into consideration Turkey’s positive outlook. The minister also remarke d on some of the country’s sensitive issues. Noting that the current account deficit was one of the major problems of the Turkish economy, Unakıtan said: “Will we have trouble because of the current account deficit? No, we won’t. We will not have any problem in a possible crisis. There are privatizations, and we will keep putting emphasis on privatizations. We will privatize the TEKEL tobacco division, and we’ve privatized the Port of İzmir and PETKİM, though we’re still waiting for the final word from the Council of State on the latter. We will have the funds for these sales if the court approves the transaction. Halk Bankası and the remainder of Türk Telekom will also be privatized. Highways, bridges and the National Lottery will be privatized. We are also considering the privatization of energy distribution and generation. … Turkey will have no problem if we keep up with the necessary privatizations.
No need for panic
Unakıtan cited the steps Turkey should take regardless of global fluctuations: adherence to financial discipline, a strong emphasis on structural reform, strengthening the economy, reducing the rate of inflation and decreasing debt stock, remedying the current account deficit and finding a resolution to debt susceptibility. “It is impossible not to be influenced by this shock in global financial markets. We will be very careful. There is no need for panic. This does not mean everybody should be comfortable — the private sector should be very careful,” Unakıtan said.
source: Today’s Zaman
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