ISTANBUL - A possible standby agreement with the International Monetary Fund is the main question regarding Turkey’s economic growth for the upcoming period, according to economist Nouriel Roubini, the New York University professor who predicted the global credit crunch in 2006.
Commenting on the Turkish economy for a report prepared by Garanti Securities, Roubini said, "The Turkish economy is much better in terms of overcoming the global crisis, compared to previous crises. But a big contraction is inevitable. Whether a deal with the IMF will be reached is the main question mark on growth. An IMF loan will inspire confidence to investors not only in financing of the current account deficit, but also in the convertibility of the debts of Turkish companies and public sector. The disquieting issue in this picture is that a possible deal seems to have been delayed to autumn at the earliest."
To reduce the impacts of the recession, the Central Bank cut interest rates by 8 percentage points within eight months, Roubini recalled. "The public finances problem may limit the continuation potential of monetary easing. The increasing public borrowing requirement may cause an uptrend in interest rates."