'Fiscal policies will get priority on global agenda'

By Gokhan Ergocun and Tuba Sahin

ISTANBUL (AA) - Fiscal policies will be given more priority on the global agenda rather than monetary policies in the coming periods, chief economist at the Industrial Development Bank of Turkey (TSKB) said Thursday.

"There is a problem in economic growth in the world, we will see decreases in forecasts," Burcu Unuvar told at the second day of Istanbul Finance Summit.

Weak growth rates in medium term brings lower interest rates, Unuvar said, noting: "We will continue to see interest rates cut until the second quarter of 2020 in other words in coming 9 months."

She added the countries which could not reduce interest rates will use fiscal policies.

"The world will go into a period where fiscal policies would be discussed more," she said.

This will also cause debt ratios to increase, Unuvar warned.

"Debt is a key word, as it was said that we faced the crisis in 2008 due to uncontrolled debt," she said.

Touching on global issues, Unuvar said developing countries constitutes greater part of global production, while their share in global consumption stood at 20%.

“When you give a share from production but you do not give a share from the consumption, it causes trouble,” she said.

She pointed out IMF and the World Bank economists failed in their forecasts in 2011.

"After the 2008 financial crisis, they projected a rapid recovery till 2016, but between 2011 and 2016, one out of every five persons' income per capita of disappeared.

"In other words, we are now able to provide food for 4 people to a table of 5 people," she explained.

Unuvar stated that the wage workers' share is decreasing in GDP, despite the steps taken such as lowering interest rate and monetary expansion.

"A tension has started globally, trade wars and Brexit are not coincidences," she added.

The two-day summit, held with a theme of Financial Metamorphosis and Back to the Future, ended on Thursday.