Can we save 2011?
Fatih Özatay, PhD
24 December 2009
Thinking on the potential growth rate of economy in 2011 makes me pessimistic to a certain extent for two reasons. First, general elections will be held in 2011 if not called early. Moreover, the year after that, presidential elections will be held. Election mood in 2007 pushed up the political polarization, which is not good for the economy. It makes economic units anxious and forces them to postpone long term plans. Therefore, demand does not rise as if it would under a normal climate. On the other hand, in such periods, no attention is paid to structural reforms. Let aside reforms, no sufficient effort is made for designing short term economic policies. The second reason is economic.
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Economic theory is shaken
Fatih Özatay, PhD
21 December 2009
The global crisis has innumerable adverse outcomes. One among these is that the settled economic theory was shaken harshly. Economists now even more frequently discuss how the science of economy can survive from this 'bad' situation. I wrote two commentaries on this issue at the end of August and at the beginning of November. And it is most likely that I will write more on this issue.
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Why is medium term inflation target high?
Fatih Özatay, PhD
20 December 2009
On December 10, Central Bank announced the monetary and exchange rate policy for 2010. Along with this, we also learned the inflation target for the following three years jointly set by the government and the Central Bank. Inflation targets for 2010, 2011, and 2012 are 6.5, 5.5, and 5 percent, respectively.
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Net errors and omissions and 2010 growth
Fatih Özatay, PhD
17 December 2009
A number of people argue that Turkey will grow by 3.5 to 5 percent in 2010. The lower threshold of this interval was defined by the Medium Term Program declared in September. To put it differently, analysts are more optimistic than the official estimates. In mid-November, I also provided a number of growth estimations and joined the group of optimistic analysts. Such analysis of mine estimated 3.8 to 3.9 percent growth for 2010.
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Capacity utilization rate can be calculated more precisely
Fatih Özatay, PhD
14 December 2009
Data on capacity utilization ratio (CUR) announced for the last couple of months are quite surprising. It goes like this: CUR for a certain month is announced a month before the industrial production figures for that month is announced. As the declaration made in November suggests; CUR for October 2009 dropped by 4.9 points compared to the same period the year before. However, October industrial production for October, as announced last week, suggests that industrial production rose by 6.5 percent compared to the same period the year before.
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Why did the level of capacity utilization ratio surprise?
Fatih Özatay, PhD
13 December 2009
This week important indicators were announced. The most surprising one was October industrial production ratio. Rise in industrial production was inconsistent with the October capacity utilization ratio announced a month ago. Whereas industrial capacity utilization rate in October fell by 4.9 points compared to the same period last year, industrial production is announced to have increased by 6.5 percent also compared to the same period last year.
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How does fiscal policy raise interest rates?
Fatih Özatay, PhD
10 December 2009
I would like to apologize from all Greek people. By the way, I would like to convey the sorrow I feel to credit rating agencies. I have not been disclaimed this fast before! Okay, you will consider my warning and take necessary actions; but why is the rush for! Now how will I visit Greece I have not been to except some islands?
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Single currency, multiple fiscal policies
Fatih Özatay, PhD
07 December 2009
Do you pay attention to the recent developments in Greece? After taking over the office, the new government understood that the 2009 budget deficit estimations announced to the public before were not correct. Of course, everybody else learned this as well. It turned out that 2009 budget deficit would be 13 percent of the GNP.
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What does credit rating serve for?
Fatih Özatay, PhD
06 December 2009
We are hungry for good news for a long time now. So it was pleasing that Fitch increased Turkey's note by two levels to BB+ this week. If nothing goes wrong, we can expect that the other two rating agencies will also increase our rating.
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Did the contraction period end? How will we measure?
Fatih Özatay, PhD
03 December 2009
In the coming days critical data will be announced: first October industrial production index, than third national income for the third quarter and November capacity utilization rate, and finally unemployment data for September. Two types of comparison will be made using the first three: comparison with the same period last year and with the previous quarter.
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