The BRICs and Turkey (1)
Fatih Özatay, PhD
10 January 2013
For the 2010-2012 period, Russia has the highest GDP per capita among the BRICs. Turkey’s GDP per capita is higher than the rest of the group. Brazil, Russia, India and China’s economies are generally assessed under a separate category. The view is that these four countries will become major economic powers in the medium-long term. These are referred to with the acronym BRIC. I want to compare the BRICs with Turkey as long as the economic agenda allows. I will include Korea in the comparison in order to provide a clearer picture of key challenges facing Turkey. These challenges are well known actually. But I believe it will be useful to address them with a comparative perspective.
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A pessimistic assessment on Europe
Fatih Özatay, PhD
08 January 2013
Even a limited downturn in Europe might risk 4 percent growth in Turkey. Industrial output figures for November will have been announced when you read these lines. Expectations are that industrial output will demonstrate a remarkable year-on-year increase. There are two factors shaping the expectations. First, there was a long holiday in November 2011 and the number of days worked being higher in November 2012 might have enabled a substantial increase in industrial output. Second, the economy might have hit the bottom in the third quarter and started recovering thereon. The former is beyond doubt. Whether the latter assumption is realistic, however, is yet to be observed. Capacity utilization and real sector confidence index series do not provide solid evidence on any recovery. Yet, we can
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Inflation outlook from a different perspective
Fatih Özatay, PhD
05 January 2013
It is hard to overcome the rigidity and Turkey generally was unable to overcome it. As a result, inflation rate commonly exceeded the target, damaging confidence. The lowest year-end inflation rate since 2002 was recorded in 2012, at 6.2 percent. A few months ago everyone, the Central Bank (CB) to begin with, was pessimist about the inflation outlook. In a report dated 24 October for instance, the CB estimated that year-end inflation will float between 6.9 and 7.9 percent.
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Though the picture seems complex, it is not
Fatih Özatay, PhD
03 January 2013
In the third quarter of 2012, Turkey’s economy grew by 1.6 percent. It appears that the fourth quarter will not be worse than the third in terms of growth performance. The US has reached a decision to avoid the fiscal cliff, which relieved the world largely if not completely. Not completely, because some issues delayed for two months might lead to new debates. Switching to domestic matters, capacity utilization rate (CUR) decreased year-on-year. I ignore the seasonally adjusted CUR figures as they might be misleading. I want to explain why in the end in order to avoid technical details for now.
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Better keep optimistic at the beginning of the year
Fatih Özatay, PhD
01 January 2013
There are critical questions, but I will only give the good news today. Happy new year! During the last commentary of 2012, I tried to assess the year from different perspectives. We can possibly draw to contrasting pictures, I argued as the economic developments of the year were conflicting. This piece will be released on the first day of 2013, so I will try to draw a purely optimistic picture. I want to go beyond transient positive developments such as a fall in inflation or a rise in capacity utilization ratio. I will try to raise longer-term and structural aspects of the Turkish economy.
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The same old phenomenon
Fatih Özatay, PhD
29 December 2012
Macroeconomic stability is not the only factor that attracts foreign funds. The risk appetite also must be strong. It is possible to draw two contrasting pictures. On the bright side, the economy has grown during a period when the largest export market Europe suffered from economic contraction. Unemployment rate that was rigid at around 10 percent before the crisis diminished to 9.3 percent in 2012. The two key vulnerabilities of the economy were tackled successfully: first, current account deficit was lowered remarkably. Second, credit growth rate that reached levels that could threaten financial stability was reduced.
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Looking towards 2012 (4)
Fatih Özatay, PhD
25 December 2012
If growth rate remains around the potential rate at 4 percent, unemployment rate will be rigid at around the current 9 percent. In 2013 the economic outlook might as well differ from the base scenario I have drawn previously, of course. So now it is time to set different scenarios. I will address the pessimistic one first as it might probably be realized earlier than the optimistic one.
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Looking towards 2012 (3)
Fatih Özatay, PhD
22 December 2012
If external conditions evolve in line with the assumptions I presented in the previous commentary, 2013 will be a better year than 2012 for Turkey in terms of the economy Now it is the time to discuss how main macroeconomic indicators would develop in 2013 under the base scenario. The bottom line is if external conditions evolve in line with the assumptions I presented in the previous commentary, 2013 will be a better year than 2012 for Turkey in terms of the economy. In a nutshell, I think the 4 percent growth estimation of the Medium Term Program is realistic. But provided that the assumptions made in the base scenario are realized. Below I address the factors that will influence Turkey’s growth performance:
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Looking towards 2013 (2)
Fatih Özatay, PhD
20 December 2012
As the majority of the conditions that will influence Turkey’s economic performance in 2013 are not under our control, we have to design a set of different scenarios. Forecasts about the economy in 2013 have to take into account the external conditions that affect Turkey’s. As the majority of these conditions are not under our control, we have to design a set of different scenarios. So, here is my “base scenario.”
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Looking toward 2013 (1)
Fatih Özatay, PhD
19 December 2012
In the light of the available information, we can suggest that Turkey’s annual growth rate in 2012 will be around 2.5 percent. Having approached the new year, it is time to share some forecasts on 2013. To put those into a context, I will depict a few scenarios concerning external conditions and shape my forecasts accordingly. I did the same by the late 2011 and put forth two scenarios, one optimistic and one pessimistic, by 13 September 2011. Later on, I provided some derivative scenarios. So, first let me remind of last year’s scenarios.
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