TEPAV Director Sak: “The State Needed Austerity; the Peoples Are Doing It.” Güven Sak delivered a speech titled “No Need to Worry(?)” during the 11th Retail Sector Summit.
ISTANBUL – TEPAV Director Güven Sak, speaking about the market interventions of the Central Bank and the latest government decisions, said, “I do not know what the Central Bank is trying to do, either. There are some measures concerning the government budget. As far as I know, the government must implement austerity measures to remedy the current account deficit, but when you look at it from a distance, you see that the people are taking austerity measures while the state is not.”
Sak delivered a speech titled “No Need to Worry(?)” during the 11th Retail Sector Summit sponsored by CardFinans and held in Istanbul on October 19 -20, 2011. He said, “The same question was raised right after the 2001 crisis. No one believed that things were evolving for better. Back then at a summit to which I was invited I felt the need to say, ’I cross my heart that things are going well.’ I sense that the same doubt is weighing on our minds again. Yesterday, we were not able to convince ourselves that things were finally going well after an unpleasant period. This time, following a long and pleasant period, we are concerned if things start to get worse.”
“The illusion of perceptions impede correct behaviors”
Sak stressed that the main problem stemmed from the illusion of perceptions and added:
“Following a long unfavorable period, people tend to discount any good news and accept it without fully believing it. Following a long favorable period, however, people tend to discount any bad news. Both of these behaviors prevent us from taking right positions.”
Emphasizing that recent developments in Turkey pointed at a conjunctural agitation, he stated that circumstances were not favorable in the rest of the world either and drew attention to ongoing debates on a possible second trough. Turkey oscillated together with the rest of the world, which appeared to have an effect on markets to some degree. He added, “We need to be cautious. Turkey was among the 10 economies that faced the severest contraction in 2009 and among the top 10 economies that recovered and jumped on the growth path in 2010. We were affected by the crisis in a manner similar to that of developed countries. However, we managed to rebalance the economy in a dynamic fashion, like developing countries. During the process, we created a problem: the current account deficit. We always must keep this in mind.”
“We grew, but we did not prosper”
Maintaining that Turkey had gone through a significant transformation in the last three decades at the end of which the economy had developed and become one of the largest of the region, Sak said, however, that the country had failed to enrich its citizens. He added, “Turkey’s position in wealth ranking did not improve. We are in the same position in relative terms.” The answer to the question “Why can’t Turkey prosper” was related to the “opportunity set of the country” that could not be improved in the short term. He argued that the transformation process prepared Turkey for a new leap and that in this context short-term threats had to be assessed in terms of the long-term opportunities they could offer.
