BY MUSTAFA AYSAN
RADIKAL- Economic analysts and columnists are currently debating whether high growth rates are sustainable. Looking back on Turkey’s past similar experiences, some are very suspicious about whether last year’s rate can hold.
There’s little doubt that in the long run, such rates usually can’t be sustained. The problem that we’re facing is, in fact, very simple and obvious. Under the pressure of the voters, our politicians are now making huge investments in the interest of short-term gains. In order to complete these investments in relatively short periods of time, they’re also racking up giant expenses, increasing the country’s public purchasing. Yet they haven’t managed to find a proper revenue stream to finance these investments. Therefore, under these circumstances, large, rapid expenses are inevitably financed by foreign debt. In addition, prices and public debt are both continuing to mount. Turkey now lacks the proper resources to finance new investments. Our past experiences show that the higher the growth rate, the more a country is likely to suffer serious economic crises in successive years due to high interest rates, inflation and public debt.
We can summarize analysts’ recommendations to help the government avoid such negative developments as follows: In fact, the main factor holding back sustainable high growth is rapidly rising inflation, whose underlying causes are usually public deficits as well as high foreign trade and current accounts deficits. Unfortunately, heading these off isn’t possible. However, if we manage to sustain our savings efforts, we can probably reduce these deficits by considerable amounts. We’ll then have the opportunity to sustain a 5% annual growth rate over the next three years. By taking the right steps, we can prevent future crises.