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Turkey's growth performance in the new period

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21.04.2017

The question of how Turkey's growth performance will be in 2017 and after has become an important matter of debate after Sunday's referendum. The International Monetary Fund's (IMF) latest global economic outlook report stated that the referendum results would produce political uncertainty, which would also reduce growth in Turkey. I must note that this is a very subjective and unrealistic comment.

The Turkish government had already begun forming the institutional structure of the new era long before the referendum. We will now see that these steps will continue faster as part of a more comprehensive reform program.

The new system will help ensure stability and economic growth in quite a short time and quickly remove the not-so-very-widespread social uneasiness. There is no need to wait until 2019 for the institutions and reforms of the new era, as I have just said, they have already begun coming into force. In this regard, the Credit Guarantee Fund is a very concrete and historic example. This is a giant step toward ending mortgage-based banking, which is the most serious problem in the tutelary economy today. The outdated mortgage-based collateral system has ended in Turkey, but instead a new collateral system has been introduced that turns the project risk into a credit risk.

The Credit Guarantee Fund provided loans of TL 137.7 billion ($37 billion) in a very short period of time. It provided only 2 percent of the total bail, amounting to TL 122.3 billion to existing credits. In other words, criticism that banks find remedies for their doubtful receivables is not right. Small and medium size enterprises (SMEs) were supported by 92 percent of these loans and the average interest rate was 14 percent. I predict that this loan expansion alone, which supports employment, will contribute 1 or 1.5 percent to the economic growth in 2017. Of course, the IMF cannot fathom this step in the new era. For this reason, I would like to advise everyone to follow these reforms, which will be rapidly introduced in Turkey as of May.

Now, let us revisit the IMF's latest global economic outlook report, which is far from the facts of the world and Turkey. Apart from cliché comments that are based on some technical and economic data, it is clear that the report has an implicit political tendency. It identifies risks that will face the global economy in the medium run, and touches on issues such as global income inequality, the introverted and protective political orientation of developed countries, and low productivity in economies. However, as the report does not identify the root causes of these fundamental structural problems, it seems that it reflects a conclusive finding, from growth estimations to necessary reforms, as subjective political wishes.

In general, the report revises up growth expectations for developed countries, including central Europe, while reducing the growth expectation of developing countries based........

© Daily Sabah