Speaking at the “World Turkish Entrepreneurs Council” meeting in Ýstanbul on Saturday, Erdođan noted that all the world nations “that are now feeling the heavy effects of the global financial crisis and paying the price because of it should carefully analyze Turkey's experience.”
“We are now standing sound on our own two feet, taking measures in advance and decisively implementing them without heeding their political cost,” he explained.
The Turkish economy was hit by two consecutive financial crises in the early 2000s, but it embarked on a strong growth trend thanks to fiscal and monetary measures taken afterwards. Its gross domestic product (GDP) expanded by over 5 percent between 2002 and 2010, although it felt the brunt of the 2008-09 global financial crisis with its GDP contracting by nearly 5 percent two years ago. However, quickly weathering the storm, it expanded by 8.9 percent in 2010 and by another 10.2 percent in the first half of this year. While the country managed to pull down the unemployment rate, which exceeded 15 percent at the height of the global financial turmoil, below 10 percent lately and also continued to improve its budget performance, its economy did not produce high inflation, which is a common risk for most rapidly growing economies. “We are going to continue taking measures and decisively implementing them. We will never make concessions on our monetary and fiscal policies and never take a step that would make private and finance sectors uncomfortable or harm the trust [toward us],” Erdođan added.
The global financial crisis three years ago was triggered by the credit crunch and the bankruptcy of the giant financial services firm Lehman Brothers in the US. Nations around the world, most of them in the West, were forced to bail out many banks while multiple financial institutions collapsed. The latest worries surrounding the global economy's health are, however, because of public indebtedness, particularly in Europe. Cooperating with the International Monetary Fund (IMF), the European Union has already bailed out Greece, Ireland and Portugal, but the voluminous financial assistance the two lenders have already started releasing failed to convince market players, as the union's larger members, such as Italy, Spain and France, were forced to bear increasing borrowing costs. Now even the European Commission, the EU's executive arm, warns of a possible recession for Europe next year.
‘Printing money without backing is modern robbery’
As part of his remarks on Saturday, Erdođan also warned Europe and the US against printing money without backing to help ease the impact of the current crisis in the short-term or buy some time in order not to bear the political costs attached to economic difficulties experienced by people. “Do you know what the most important part of our policy was? Look, the kind of problems in the US and Europe are because they printed money without backing but we did not because we deemed it modern robbery. It is so because it is nothing but stealing money out of people's pockets in a modern way. We never resorted to it and our currency appreciated thanks to that,” he said.
In response to the financial crisis in the US, the country's Federal Reserve rushed to help with a $600 billion bond buying program which was completed in July. In Europe, on the other hand, the Frankfurt-based European Central Bank (ECB) started buying government bonds of financially troubled eurozone members in the secondary market because it is not authorized to directly do so.
The act of printing money without any value behind it creates de facto inflation because it also reduces the worth of a country's currency that is already in circulation. Criticizing the ECB's money printing move, German Foreign Minister Guido Westerwelle wrote for the Financial Times on Friday that this policy would offer only short-term relief and could boost inflation as well as dissipate reform in financially troubled countries within the eurozone. “In the end we would end up with a depreciated currency and an even more destabilized eurozone,” Westerwelle underlined before the weekend.
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Source : todayszaman.com
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