The growth locomotive of the global economy for the past 10 years has been "developing Asia." With the contribution of the growth performance of both China and India, the geographic area that grew 6.7 percent in 2015 is foreseen to grow from 6.3 to 6.4 percent during the 2016-2018 period. While the average of all developing economies appears to be 3.7 percent according to actual data, it is expected to be 4.1 percent by the end of 2016, 4.5 percent and 4.8 percent for 2017 and 2018, respectively. However, the average of the developing economies except for China and India stands at 0.9 percent. Assuming that Turkey ended 2016 with a growth of 2.2 to 2.5 percent, we are cruising at an altitude of 2.5 times the growth of these developing nations when the two exceptional countries China and India are left out. It is expected that the Turkish economy will see the following growth trends: between 2.4 to 2.8 percent in 2017 and between 2.8 to 3.2 percent in 2018.
It is possible that the Turkish economy will grasp a growth rate of 3 percent or higher in 2017 if the recovery in global trade continues, Turkey's net export contributes to its growth, and especially the improvement of the private sector investments after the constitutional referendum in April can be looked forward to. For a world economy where it is predicted that Russia can secure growth in the range of 1.1 to 1.2 percent growth, Brazil a growth of 0.2 to 1.5 percent, Saudi Arabia 0.4 to 2.3 percent, and South Africa 0.8 to 1.6 percent, Turkey's return to a growth trend of 3 percent and higher in 2017 and 2018 will strengthen the global perception of the Turkish economy. As a matter of fact, anticipation that the Turkish economy's growth sequel will continue has brought the index values of stocks traded in Borsa Istanbul close to their peak in the last 25 months.
The basis of the new growth model are composed of new strategies regarding entrepreneurs and SMEs, towards industry and employment, agriculture, energy policies, and the financing of the economy through macroeconomic management. Regarding these headlines, we have to strengthen the engine of growth - the domestic market, to bolster our production capacity and product variety in terms of its contribution to net export and expand our regional area of influence as a production base in the Eurasia region. Our aim will be to increase our share in the global economy to 3 percent with a strong domestic market and manufacturing performance.
China continues its 'transformation'
China is shifting its growth model based on state capitalism, initiated at the end of the 1970s, to market capitalism. This transformation process has naturally caused China's economy to diverge from its growth ratios of 9 percent and over in the upcoming period. In fact, the Chinese government has stated that last year's economic growth prediction for 2017 decreased from 7 percent to 6.5 percent. Prime Minister Li Keqiang pointed out that the foundations of the Chinese economy are strong, that the capital adequacy ratio of commercial banks are high, and that China has various instruments at hand that can be used for fiscal policy tools. In addition to this, Prime Minister Keqiang has indicated that the production quotas of companies manufacturing an oversupply of coal and steel, also referred to as zombie companies, will be limited and a deduction of 50 million tons in steel production and 150 million tons in coal will be realized. This situation confirms the transition to the new model. It seems like the Chinese economy will complete this transformation process by growing 6.5 to 6.7 percent in 2016-2018 period, the lowest growth for the last 26 years.
$1 trillion energy investment from Asia
Over the last few years, even though the infrastructure of the Asia and Pacific region has been improving, power blackouts caused by the lack of sufficient capacity and infrastructure have hampered economic development. This is why the Asian continent expects a yearly investment of $250 billion until 2020, thus approximately $1 trillion, in electricity and infrastructure from the private sector. According to the Asian Development Bank's report titled,"Meeting Asia's Infrastructure Needs," more than 400 million people do not have access to electricity and approximately 300 million people are deprived of potable water because of insufficiencies in infrastructure. For the 45 countries in the Asia Pacific region to win their fight against climate change and poverty, a $1 trillion investment is a critical necessity in the medium term.
While 90 percent of investments in infrastructure are still realized by the state, private sector investments are focused on the telecommunications area. President of the Asian Development Bank Takehiko Nako stated that the demand for infrastructure in the Asia Pacific is much beyond the current supply. Nako said that countries on the Asian continent need a new and improved infrastructure to determine their quality standards, promote economic growth, and to respond to the global strain of battling against climate change, and affirmed that they will encourage more state-private partnerships and corporate reforms with investment-friendly policies.
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