Turkey’s Economy Minister Nihat Zeybekci has urged the country's banks to lower interest rates to support economic activity.
“Turkey needs lower interest rates to sustain the rapid growth it posted in the first half of the year,” Zeybekci told Bloomberg on September 13.
The Turkish economy expanded at 5.1% y/y in the second quarter after growing 5.2% y/y in the previous quarter.
The minister said that the government would sit down with commercial lenders, the banking regulator and the central bank to explore why the gap between inflation and interest on commercial loans is so big.
“There are resource constraints, OK. But the government also needs to see if banks are seeing the market demand as an opportunity and using it for profit maximisation.” Zeybekci said.
According to the minister, economic growth likely accelerated to about 7.5% during the current quarter from 5.1% in Q2.
“Full-year growth will top 6% this year and 5.5% in 2018,” Zeybekci said.
The combined net income of Turkey's banks increased by 27.5% y/y to reach TRY29.05 (€7.1bn) across January-July, data from banking sector watchdog BDDK showed on September 6.
Their total lending rose by 20% to TRY1.94tn.
President Recep Tayyip Erdogan recently called on the banks to open the credit taps.
“We will pressure the banks, especially state banks. We will pave the way for investors to access credit easily,” Reuters quoted Erdogan as saying on September 12.
“Prime Minister Binali Yildirim and I will speak with the relevant banks and tell them to pull their interest rates down”, he said.
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