UPDATE WITH MORE QUOTES
By Gokhan Ergocun and Tuba Sahin
BURSA, Turkey (AA) - The biggest risk facing the world economy is protectionism, which caused the Great Depression in 1929 and afterwards World War II, Turkey’s deputy prime minister said on Friday.
“There are some misguided policies leading people to ask if we’re on the verge of some kind of trade war," Mehmet Simsek told the opening ceremony of the 7th Uludag Economy Summit in the northwestern province of Bursa.
Simsek stated that liberality is the key for global economic growth.
"Millions of people came out of poverty and found better health and education opportunities. Global average life expectancy rose," he added.
The world economy is in good shape in the short-term but there are some uncertainties in the medium-term and huge risks in the long-term, he warned.
All countries around the world are growing but usually such synchronized growth does not last long, he added.
"Synchronized growth periods lead to rises in oil prices, inflationary pressures, and tightening monetary policies, which are the largest risks in the short-term," Simsek said.
The two-day summit, organized by the Capital and Ekonomist magazines, is being attended by nearly 1,200 businesspeople from around the world.
- Structural reforms
Highlighting that structural reforms are the way out for global risks, Simsek said advanced and emerging countries are not introducing enough reforms.
Simsek added that investments are stable worldwide so productivity is not rising.
"There cannot be permanent prosperity in a world which does not have rising productivity. There is a downward trend in global productivity," Simsek said.
Simsek also urged Turkish banks to establish investment banks with the help of the government, adding that investing in promising start-ups can earn more profits than traditional sectors where margins are lower and competition is tighter.
"Invest in promising start-ups especially, put more capital in them. The future is there," he said.
Telling how Turkey’s economy has shown strong growth over the last 15 years despite issues such as turmoil in the Middle East, terrorism, and the July 2016 defeated coup, Simsek said if the country maintains its growth rate, it could catch up to the EU’s GDP within 14 years.
"Turkey's target of closing the gap with Europe is becoming real. We will be able to catch up to the U.S. as well," Simsek said.
- Combatting misconceptions
Simsek said domestic and foreign demand in Turkey is currently strong.
"Investment will rise because the capacity utilization rate is high and there is substantial stimulus," Simsek said.
He added that the government has allocated great resources to investments and that Turkey’s investment performance is better than that in many countries.
He stressed that high inflation is a side effect of Turkey’s high growth rate.
"Unfortunately inflation is above 10 percent. This is one of the biggest problems we face. The reason behind this is mostly the Turkish lira losing value," Simsek said.
Simsek highlighted that these losses are not always related to Turkey's economy but rather to political developments in the country or region.
There is the huge gap between perceptions of Turkey and the reality, Simsek said, and added:
"We can dispel misconceptions of Turkey through reforms and good policy moves. We will do a better job showing the reality."