Turkish banks bettering EU counterparts

The capital adequacy ratio for Turkish banks is better than that of many EU countries, European Commissioner for Economic and Monetary Affairs Olli Rehn has said. "Turkey has managed to cut its public debt nearly to half. The banking sector has been revamped, and currently capital adequacy ratios are higher than in many EU member states. The markets have taken note of Turkey's rapid growth and prudent economic and financial management," Rehn was quoted as saying by Anatolia yesterday. The reforms that were implemented by Turkey after its 2001 economic crisis had started to yield favorable outcomes, he added. In the aftermath of the 2001 crisis, Turkey implemented sound policies, and combined a responsible fiscal and monetary policy mix with major in-depth structural reforms in many areas, including in the financial sector, said Rehn. The Turkish economy has achieved remarkable growth in recent years thanks to economic and financial reforms, he said. The Turkish economy grew 6 percent annually between 2002 and 2008, as well as 9.2 percent and 8.5 percent in 2010 and 2011, respectively, he said. "As the EU is Turkey's main [export] market, the subdued demand in the EU is expected to weigh on export growth in 2012. In light of this, together with a more restrictive monetary and fiscal policy mix, GDP growth is expected to be moderate in 2012 and to reach 3.3 percent," the commissioner said. Rehn's 3.3 percent growth target is a notch above the International Monetary Fund's most recent 2.3 percent growth target, yet not as optimistic as the Turkish government's 4 percent expectation. The EU commissioner also said he considered Turkey's high inflation rate a temporary phenomenon. "However, I believe that the high inflation rate is in large part due to temporary factors. Conversely, the current account deficit is of more concern because it may suggest that competitiveness is steadily eroding, while the shortfall in domestic savings will be hard to correct," Rehn said. Rehn said Turkey's membership in the EU would be beneficial for the bloc, adding that he strongly supported the country's full membership. "However, Turkey's EU bid [is progressing] very slowly. Everyone should exert maximum efforts within the scope of the ‘Positive Agenda' on which Turkey and the EU have agreed." Rehn also said he would like to make it clear that Greece should remain in the eurozone.