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High growth under high interest rates

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The Turkish Statistical Institute (TÜİK) announced on Sept. 11 that Turkey’s economy grew over 5 five percent in the second quarter of this year, just as it did in the first quarter.

The first question that occurred to me was: Thanks to the huge treasury supported credit guarantees added to the Credit Guarantee Fund (KGF), credits volume in Turkish Liras have increased the growth rate of 10 percent in second quarter, roughly 100 billion – did this have no effect at all? If our growth is equal to that of the first quarter, then where is the effect of the credits? If this is the growth, how had the credits which grew 10 percent in the second quarter helped?

Furthermore, as you know, the Central Bank raised the interest rates in mid-January, which brings me to my second question. If high interest rates are an obstacle to economic growth (as suggested by some Turkish politicians), then how was it possible for Turkey to grow 5 per cent in both the first and second quarters despite such a high interest rate? We can........

© Hürriyet Daily News