Ankara, March 14, 2012 - The World Bank today launched a new flagship report, “Turkey Country Economic Memorandum (CEM) on Sustaining High Growth: the Role of Domestic Savings” at a conference in Ankara, organized jointly with the Undersecretariat of the Treasury and the Ministry of Development.
The Country Economic Memorandum (CEM) on “Sustaining High Growth: the Role of Domestic Savings” analyzes the determinants of domestic savings in Turkey for households, corporations and the public sector and reviews policy options to boost domestic savings in order to ensure high and sustained growth rates going forward.
Domestic savings in Turkey fell in the 2000s, mostly due to a decline in household savings. Low domestic savings matter for at least two reasons. First, domestic savings finance investment and thus underpin growth. In developing countries, higher domestic savings tend to be associated with higher investment and growth. Second, because of declining domestic savings, Turkey’s dependence on foreign financing has increased and the current account deficit has widened, putting sustained growth at risk against the background of global economic uncertainty. Rising domestic savings would allow fast growth to continue and diminish the risk of economic volatility.
“Turkey has ambitious economic targets for the coming decade” said Martin Raiser, World Bank Country Director for Turkey, on the occasion of the launch. “Boosting domestic savings will be key to realizing sustained and fast growth, whilst reducing external imbalances. Turkey’s households could be encouraged to save more through improved financial education, tax incentives and new financial instruments. Increasing labor force participation, especially of women, and carefully reviewing social security arrangements could also help raise household savings in Turkey.”
The report also points to the importance of policies to boost competitiveness and improve the business climate for corporate savings rates and for closing Turkey’s external financing gap.
The report has been prepared in close partnership with the Ministry of Development, and in consultations with the other public agencies, private sector, civil society, and other stakeholders. The World Bank Group invites and welcomes ideas and suggestions from stakeholders throughout and outside Turkey on these topics.