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TEPAV Director Sak: "We are Going Through a Period Where Protectionism is Perceived to be Legitimate"
26/06/2009 - Viewed 1735 times

In his opening speech for the "Global Development Finance 2009 - Map of Global Recovery" panel organized by TEPAV and the World Bank, TEPAV Director Prof. Dr. Güven Sak maintained that the character of the current financial crisis is indefinite and said that in such a climate, it is necessary to forget what was once known and draw a new framework. Touching upon the negative effects of the crisis on the economy, Sak expressed: "Financial system is operating compared to the past; i.e. the beginning of the financial crisis. However, it in a way operates with a life support unit. It is questionable whether or not this is a good thing." Reminding the audience of the fact that countries implement various protectionist measures to stimulate domestic demand, Sak said that each measure implemented to stimulate domestic demand also menas, in the global world, supporting companies from other countries. Sak maintained:

"We have to seek a global coordinator to solve this highly important problem. I believe that the IMF and the World Bank must act like a State Planning Organization. A global State Planning Organization. A mechanism that will ensure whoever reaps the benefits must pay the costs involved. However, it is most likely that even Monaco will object to the establishment of such a supra-national mechanism. Therefore, it is quite hard to solve this coordination problem. So, what is the easy option? It is implementing protectionist measures."

At this speech, Mark Thomas, World Bank Turkey Office Senior Economist, expressed that there are some signals of recovery from the crisis but argued that this should not relieve anybody. Underlining that in Turkey significant decreases in exports, industrial production and in other important indicators and unemployment rates rose all with the onset of the crisis, Thomas said "We are in a period where recovery will take place at a slow pace. In Turkey, we must not expect rapid recovery; in particular an export based one". Noting the post-crisis period, Thomas emphasized that in this process Turkey has to design long term policies and ensure sustainability and fiscal expansion in the long term.

At the panel session, World Bank Development Economics Group Senior Economist Mick Riordan and World Bank Development Economics Group Economist delivered presentations.

Global Development Finance 2009 Report…

At the meeting hosted by TEPAV, Global Development Finance 2009 Report was also presented. As the report suggests, the world has entered a slower recovery period where financial system has to be managed more tightly and efficiently. Following 8.1 and 5.9 percent growth in 2007 and 2008, respectively, developing countries are expected to grow only by 1.2 percent in 2009. The report foresees that, excluding China and India, GDP of developing countries' will contract by 1.6 percent which will lead to a further rise in employment losses and poverty. The report also expects a 2.9 percent contraction in global GDP in 2009.

As the report suggests, global GDP is expected to turn around upwards and grow by 2 and 3.2 percent in 2010 and 2011, respectively. It is foreseen that developing countries will experience relatively more rapid growth with 4.4 percent in 2010 and 5.7 percent in 2011, though will be weaker compared to the strong performance before the crisis period.


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