EBRD: Turkish growth is ‘subdued’ given country’s potential

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EBRD director responsible for Turkey says Turkish companies need better integration in global economy.

ANKARA – Turkey’s economic growth of 3 percent is “subdued” given the country’s potential, European Bank for Reconstruction and Development (EBRD) new director for Turkey Jean-Patrick Marquet said.

Speaking at the EBRD Annual Meeting and Business Forum in Tbilisi on Friday Jean-Patrick Marquet  said: “To increase growth to Turkey’s potential, the country would need to reduce its energy dependence, so invest in renewables, boost innovation to increase competitiveness, work on regional imbalances and broaden its capital markets which are currently too small and too narrow for big investments,” Marquet said.

Last year Turkey received more money from EBRD than any other country with 1.4 billion euro.  The bank has invested over $5 billion in 140 projects in the country since 2009. These range from finance to infrastructure, from energy to support for small- and medium-sized business.

Marquet said that the EBRD has a multi-pronged approach in Turkey.

“We work with small- and medium-sized businesses through banks, particularly in the regions, and with women. We also work with big corporates trying to boost access to capital markets, increasing loans for investment. We try to work on infrastructure projects to allow the full potential to be realized. We are engaged in policy dialogue which is very important to develop the capital markets, and to improve energy efficiency.  All together, we try to have a comprehensive approach to economic development in Turkey,” he said.

Marquet said Turkey has very robust companies with long histories.

“But those companies currently remain family-owned, typically they are not yet part of the global value chain and so they need to work on integration in the global economy.

“They need to develop partnerships, invest in competitiveness, innovate. We are trying to help them through finance, loans, possible equity investments but also through technical assistance, helping them develop partnerships with universities or with international investors so that they are more included in the global economy,” he added.

According to Marquet, there is lack of equity across the Turkish economy. “It is clearly critical for the big infrastructure investments or the big corporate investments. What we are trying to do is two-fold. First we can invest directly and we have made investments, for example, with Pasabahce, the glassware manufacturer, and we are looking for similar investments with other Turkish companies. And, on the other hand, we try to develop the capital markets, encourage IPOs, improve governance, facilitate listings, so that Turkish corporates can access a broader pool of investors,” Marquet said.

The EBRD forecasts Turkey will see growth of 3 percent in 2015, a figure slightly lower than what the central bank is predicts. Marquet previously said that the EBRD sees 2015 as being below trend for the country, related to the current market volatility and the election in June which produces uncertainty. “But we do hope that things will stabilise again, and that the country will achieve its growth potential afterwards,” he added.

The EBRD started investing in Turkey in 2009. It currently operates from offices in Istanbul, Ankara  and Gaziantep which is the economic center for Southeastern Turkey. Nearly 98 percent of the EBRD’s work in Turkey is in the private sector.

Turkey’s energy import bill will total $181.3 billion in the next three years, according to statistics in the country’s Medium-Term Economic Program. Energy imports will cost Turkey approximately $57 billion in 2015, around $60 billion in 2016 and nearly $64 billion in 2017.  The country spent nearly $56 billion on energy imports last year.

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