Turkey’s economy administration is pleased with the trend of subdued growth in consumer loans in the last 18 months, Deputy Prime Minister Ali Babacan has said.
Speaking to the General Assembly of Banks Association of Turkey, Babacan said on Thursday that the slowing growth in consumer loans was much needed to address the chronic current account deficit problem in Turkey.
Babacan said: "The trends in the last one-and-a-half year are quite healthy in terms of loans especially. Consumer loans are not increasing as rapidly as in the previous term.
"The growth rate of commercial loans is reasonable and loans for SMEs continue to rise fast, this is very important. Our goals set at the beginning of last year were actualized."
Last year, the Central bank of Turkey and Banking watchdog introduced measures to curb the demand for consumer loans used largely for the personal consumption of imported goods, as the current account deficit posed a risk to the Turkish economy.
Babacan explained that there is direct correlation between loan volume and the current account deficit, and that current account deficit growth keeps pace with loan growth.
Babacan said: "If a credit is received for an investment, for SMEs, we clearly see the current account deficit sourced from this loan is temporary, as returns expected from this investment and additional exports would offset its share of current account deficit through exports.
"But the use of such loans, for financing imported goods targeted for consumers, is not healthy for the economy and should be regulated."