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    The deepening of polarization and the economy
    Fatih Özatay, PhD 18 June 2013
    In the current era marked by critical steps in an effort to solve the decades-old Kurdish issue and put an end to the bloodshed, it is beyond comprehension how Turkey is moving towards another trap of polarization. [More]
    The Gezi resistance and the great financial crisis: what’s in common?
    Fatih Özatay, PhD 13 June 2013
    During a long period of stability, major elements of instability might pile up slowly. Is there anything common between the underlying reasons for the global financial crisis, and the Gezi Park resistance and the peaceful demonstrations in support of it? I have to admit that at first glance the question seems rather “odd” and irrelevant. [More]
    Who is this interest-rate-lobby?
    Fatih Özatay, PhD 11 June 2013
    I was just about to give up when I got a flash: instead of asking who would most benefit from high interest rate, I turned to the powers that push up Turkey’s riskiness. On Sunday I decided to write about the “interest rate lobby” debate. Then I backed; I thought that people would ask why I felt such urge and suddenly I would find myself in deep trouble. But friends from the Radikal called me and asked if I could write a commentary explaining what this interest rate lobby was. How about that! I said yes as this was their only request in years. Anyways, here it is. [More]
    Possible economic consequences of the Gezi Park resistance (2)
    Fatih Özatay, PhD 08 June 2013
    Political risk perception concerning Turkey will increase; with ups and downs but always here with us. Last Thursday I tried to discuss the possible long-term consequences of the Gezi resistance for Turkey’s economy. The resistance might help freedoms blossom and change the way of doing politics in Turkey. In other words, the resistance has the chance to trigger the shift from an imperfect to a mature and libertarian democracy. In that case, there is hope for a higher level of welfare, a more equitable income distribution and a cleaner environment. I hope things will evolve in this direction. [More]
    Possible economic consequences of the Gezi Park resistance (1)
    Fatih Özatay, PhD 06 June 2013
    The Gezi resistance might help Turkey overcome the impediments to a mature democracy. What are the possible economic consequences for Turkey of the Gezi Park resistance that started upon environmentalist sentiments and turned into the demand for freedom and democracy following the violent oppression of a democratic right? It’s a tall order. It should be addressed from two different dimensions: short-term and long-term. It is easier to comment on the long-term consequences. I will embark on that today. [More]
    FED: Then and now (2)
    Fatih Özatay, PhD 04 June 2013
    The expectation that the FED will aggressively increase interest rates before the anticipated timeframe dampened the risk appetite towards Turkey and countries alike. [More]
    FED: Then and now (1)
    Fatih Özatay, PhD 01 June 2013
    If the FED does “now” what it did “then” (in terms of direction and magnitude) what would be the consequences for Turkey? In the last couple of weeks Turkey’s interest and exchange rates have increased, due to the expectation that the US Federal Reserve, the FED, will start withdrawing the liquidity generously injected since the beginning of the global crisis and raising the short term policy rate recently around 0-0.25 percent. Benchmark bond rate that was as low as 4.7 percent recently, reached slightly above 6 percent by noon yesterday. Since the beginning of May, the lira value of the Euro-Dollar basket increased by 3.5 percent. What’s going on? [More]
    Consumption on the rise, investments stagnant
    Fatih Özatay, PhD 28 May 2013
    In the light of the information available, 4 percent growth in 2013 is still achievable. Lately I have addressed the vulnerabilities facing Turkey’s economy and consequent risks. I will stick to this issue for some time more. But today I want to switch back to the current news as important data was released. [More]
    It’s not too late
    Fatih Özatay, PhD 25 May 2013
    Despite all the praise and credit, no country is immune to crises. This is a critical lesson to learn. Do you remember the well-known economic crisis in Mexico, also known as the Tequila crisis? It was unveiled gradually in the second half of 1994. In December, the government declared a devaluation of the peso by 15 percent, which was followed by the crisis. In March 1995, the dollar/peso exchange rate was doubled. Of course, the story is not that simple; but this is not the concern of this commentary. If you are wondering why I have raised this two-decade old crisis, let me put a reminder here: a month before the crisis erupted, the US press had featured op-eds and commentaries about how bright the economists of Mexican economic management were and how the country had done economic miracl [More]
    Let’s hope for the best
    Fatih Özatay, PhD 23 May 2013
    Turkey will be transferring abroad some portion of its savings, which are already remarkably low. Let’s hope for the best! A storyline we frequently hear nowadays: “In developed countries interest rates are radically low. Emerging market economies also have joined them lately. Therefore, it is but natural that interest rates are in decline in Turkey. Alike, interest rate falling below inflation is not a problem.” [More]