An unfortunate statement
Fatih Özatay, PhD
31 July 2014
I think the following should be the most unfortunate statement ever coming from a central bank official: “Inflation has been obstinately high lately. We have introduced new measures. If these don’t work either, we will start considering structural problems. Hence, if we cannot attain a sufficient decline in inflation, we might have to declare a higher target for the next year end.”
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Each country first has to do its part
Fatih Özatay, PhD
24 July 2014
Countries that call for international cooperation have to sit down and assess the strength of domestic cooperation. If there is no such cooperation across the domestic economy, their right to demand domestic cooperation can easily be challenged.
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Living within one’s means
Fatih Özatay, PhD
17 July 2014
Cooperation does not seem on the table from this date onward, either. That’s why Turkey has to get used to living within its means A large part of emerging market economies encountered a major problem starting in the second half of 2010. The chief source of the problem was that developed countries’ central banks had first cut interest rates down to zero and later injected abundantly liquidity into the system in order to ensure certain level of recovery in their respective countries.
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Turkey’s economy is sensitive to external shocks
Fatih Özatay, PhD
03 July 2014
Turkey suffered the highest reduction in GDP growth rate and more than doubled the average loss in output among Argentina, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, and South Africa.
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The figures are clear enough (3)
Fatih Özatay, PhD
08 March 2014
This artificial and overstated growth performance is frequently quoted for political propaganda. Today I would make a comparison with Turkey and a group of selected countries on the basis of unemployment rate and GDP growth. The group is the same as the one I used in the CPI comparison last week during the first piece of the series. At the same time, these are the countries which a Federal Reserve (FED) report submitted to the US Congress studied to identify which will be hit the hardest by its current monetary policy. That comparison did not cover unemployment and per capita GDP growth. I took the figures for the 2012-2013 period to see how Turkey compares. The first column ranks the countries from the lowest unemployment rate to the highest, and the second column from the highest to the
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The figures are clear enough
Fatih Özatay, PhD
04 March 2014
Inflation is on the rise. Annual CPI was at 7.8 percent in January and increased to 7.9 percent in February. Inflation figures for February validate the expectation that inflation is on the rise. Annual CPI was at 7.8 percent in January and increased to 7.9 percent in February. The critical increase was in headline inflation, which determines the CPI dynamics. The I indicator increased to 8.4 percent compared to 7.6 percent in January on year-on-year basis. Let me remind you that the average headline inflation remained significantly below the CPI average previously.
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The timing of the FED is significant
Fatih Özatay, PhD
20 February 2014
If the FED was to take its decisions in 2010, the world would have started discussing how fragile the Turkish economy was immediately back then. Did anyone of us fear in the late 2009 or the early 2010 that net capital inflows (net foreign debt or more fashionably net foreign resources) could decline? Say that we were subjected to fierce propaganda; but were international markets complaining about the vulnerabilities in Turkey? On the contrary, they were in fact praising the Turkish economy. Say that we all have a short memory and have gone through a lot in the meanwhile; but we can always check statistics.
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Statistics speak louder than words
Fatih Özatay, PhD
18 February 2014
Turkey performs poorly also in terms of GDP growth; ranking eleventh in growth and first in volatility. It is clear that long-term trends augur bad for Turkey. The income gap with rich countries is quite high and it does not seem to narrow down. Government officials therefore keep away from such comparisons. Their discourse is more like “the economy has grown remarkably compared to Europe; unemployment rate is radically lower than that of Spain; public debt is lower than the European average; inflation is incomparably lower than what it was before 2003; Turkey will be the tenth largest economy by 2023, if God lets” etc.
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Economic policy mistakes (5)
Fatih Özatay, PhD
13 February 2014
Can a country home to the ‘Hello Fatih’ scandal achieve the income level of rich countries? First of all, I have nothing in common with my namesake in the media manipulation scandal, known as the “Hello Fatih” scandal. Hoping that I have averted possible misunderstandings let me raise today’s question: Can a country home to the ‘Hello Fatih’ incident achieve the income level of rich countries? More clearly, can a country where no one believes that reliable and fair investigation and judgment will be carried out to clamp down on the alleged cases of corruption catch up with rich countries in income?
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Economic policy mistakes (4)
Fatih Özatay, PhD
11 February 2014
Expected rates float above the targets. So do realizations. This is a critical mistake Number four on the policy mistakes lists is the policy to curb lira depreciation. In football, the goal keeper is caught on the wrong foot when he or she cannot prevent an attack as he or she cannot reverse the move already started to one end of the goal while the attack comes to the other. Similarly, given the extraordinary conditions across financial markets, that is, the risk that the volume of capital flows to Turkey changes sharply and suddenly, it was highly probable that the lira depreciation policy catches Turkey on the wrong foot.
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