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    Continued on innovation
    Fatih Özatay, PhD 20 March 2012
    Prominent feature of the leading innovators is the high level of firm activity in innovative areas, high level of R&D funds in particular. Last Saturday, I talked about a report on innovation which is published regularly to compare the innovation performance of European Union countries and candidate countries, and “the innovation index” on which the report is based. The distinctive feature of the report and the index is that it assesses innovativeness at three dimensions. The elements comprising these three dimensions constitute the rings of a chain which starts with advanced R&D activities and education to new products. [More]
    Turkey’s relative performance of innovation
    Fatih Özatay, PhD 17 March 2012
    The new seating and voting order the Education Commission adopted will definitely contribute to Turkey’s position in the 2012 innovation index. I gossiped on the current account deficit for the last two commentaries. Today, I want to comment on a “deep” aspect about the current account deficit. I am planning to hit two birds with a stone, associating today’s topic with the 4+4+4 education bill the Parliament is currently negotiating. The subject is innovation, a concept for which we do not have a proper Turkish word. Maybe, it is for a reason, which the following discussion might reveal. Yes, why not?  A noteworthy report [More]
    How to avoid head trauma
    Fatih Özatay, PhD 15 March 2012
    It is useful to keep in mind that fiscal policy can be a strong tool to slow down the economy, when necessary. Please think, what would happen if the Fed signaled that interest rates will be raised soon? Evidently, this would not be good for Turkey. But we know that the Fed will not be increasing interest rates anytime soon; all of the recent remarks state that attempts to raise the rates will earliest come by 2014. Of course, it is not possible to estimate the period after presidential election, which still marks a distant future. OK, what if Greece has to leave the Eurozone within a few months or Portugal also approaches toward the same path with Greece? Turkey would go through tough times, right? [More]
    Let’s hope for the best!
    Fatih Özatay, PhD 13 March 2012
    Since July, capital inflows have been standing below the amount required to finance the current account deficit concerning three-month cumulative figures. Yesterday, balance of payments figures for January were announced. Today, I want to share with you some points that attracted my attention. First is that, the drop in the current account deficit, observed during November and December, ceased in January. Current account deficit maintained the level in January 2011. How you interpret this development, of course, depends on how you read this. From one angle, you can be content as the current account deficit did not increase compared to the year before. [More]
    Industrial output on decline
    Fatih Özatay, PhD 10 March 2012
    In January, the downwards trend in both the output level and pace of increase in output became visible. In January, seasonally and working-day adjusted industrial output decreased month-on-month by 3.1 percent. Industrial production has been floating within a narrow interval for the last fourteen months. During the period between December 2010 and January 2012, seasonally and working-day adjusted industrial production index averaged at 126.5. Over this period the highest index value was 3.3 points above the average and the lowest was 2.1 points below the average. The index value for January, announced on last Thursday, equaled the fourteen-month average (Graph 1). [More]
    Some observations on exports
    Fatih Özatay, PhD 08 March 2012
    Today, I want to review the correlation between Turkey’s export performance and export partners’ growth performance. According to the newly revised IMF estimate, Europe, which grew by 1.6 percent in 2011, will shrink by 0.6 percent in 2012. The Eurozone is expected to contract by 0.5 percent. Earlier this week, growth figures for the fourth quarter of 2011 were announced. According to this, both the Eurozone and Europe contracted by 0.3 percent compared to quarter three. There is a close connection between the GDP growth of Turkey’s export partners and Turkey’s export performance. Of course, GDP growth is not the only determinant of the volume of exports to that particular export partner. Exchange rate and the quality of export goods are also of importance. Today, I want to review the corr [More]
    How will inflation rate change?
    Fatih Özatay, PhD 06 March 2012
    Growth rate is not the only macroeconomic indicator which is hard to estimate for 2012. Currently, it is even difficult to estimate the inflation outlook. Inflation figures for February were announced. Annual consumer price inflation decreased slightly to 10.4 percent. Core inflation, which is a stronger indicator for inflation dynamics, eased month on month from 8.4 to 8.1 percent. In January and February, therefore, inflation matched expectations as well as the projections of the Central Bank of Turkey (CBT). [More]
    Some unpleasant facts about unemployment
    Fatih Özatay, PhD 03 March 2012
    Unemployment rate around 10 percent is about to become the fate of Turkey. This should be prevented. Last Thursday average unemployment rate for 2011 was announced. In 2009, when the impacts of the crisis on the labor market was felt the harshest, the rate stood at 14 percent. During the next two years, the rate decreased sharply to 9.8 percent. More importantly, non-agricultural unemployment rate also dropped by five points to 12.4 percent. [More]
    New Euro injection
    Fatih Özatay, PhD 01 March 2012
    Huge injections by the ECB do not eliminate the fundamental problems of Europe. Yet, it is not the ECB’s duty to solve Europe’s problems. On December 21, European Central Bank (ECB) lent banks 489 billion Euros for three years at the average of benchmark interest rate, which currently is 1 percent. With a second auction held yesterday, the ECB awarded another 530 billion Euros to banks. This also is a three-year loan at the average of benchmark interest rate. It is said that in the first auction, 523 banks were financed and the number is estimated to rise to 800 with the last auction. [More]
    Financial regulations in the UK
    Fatih Özatay, PhD 28 February 2012
    UK has been changing the financial system radically. The current authority for financial services is to be abrogated. I am keeping my promise: I will go on examining under which governance structure macroprudential policies give healthier results. In my commentary dated February 16, I summarized the four options proposed in an important report by the Bank for International Settlements (BIS). The first was to assign the role as a shared responsibility by more than one institution. There were two alternatives under this option: to establish a macroprudential policy council (or a financial stability policy council) or to introduce an arrangement under which macroprudential policy decisions will be taken by multiple agencies. Second was to establish a separate macroprudential agency. The third [More]