MTP and independence of the Central Bank
21 September 2009
Among the most important elements of the Economic Recovery Program launched in Turkey in the aftermaths of the 2001 crisis was the granting of independence to the Central Bank. Independence does not mean central banks' taking actions without anyone else's approval. The practice in many countries as well as in Turkey is as follows:
Large difference between industrial growth figures
20 September 2009
Recently, economy media lays particular emphasis on one point: There is a significant difference between the national income growth figures for the second quarter announced last week and the industrial production index (growth) announced earlier. They say that such a difference did not exist in the past. So, let us compare the growth rate of the industrial sector as a sub-item of GDP with the growth rate derived from industrial production index. First of all, it is necessary to remind you of what happened in the last quarter. As GDP data suggests, industrial sector growth was minus 8.7 percent in the second quarter. But industrial production index for the same period is minus 15.4 percent signifying a considerable difference.
Medium term program has three vulnerable points
17 September 2009
Yesterday Deputy Prime Minister Ali Babacan announced the medium term program for 2010-2012 period with a press meeting. Moreover, revised estimates for 2009 were also announced. Let me first put this: Macroeconomic targets and estimates seems to be achieved under two conditions: if a new global shock is not encountered and if we can fulfill the measures and reforms listed.
'IMF light' again after nine months
14 September 2009
Discussions in Turkey so as to whether or not Turkey should sign an agreement with the IMF are posited over wrong grounds almost for a year. I believe that a substantial part of the opinions set forth in this regard can be reduced into two main groups.
Turkey is overcoming the economic crisis: a new indicator
13 September 2009
Oh God! How do I make this mistake? How did I miss the leading indicator showing that Turkey is about to leave behind the economic crisis? I apologize to you all. But let me go back in time to explain clearly why I apologized.
Things the meeting made me think
10 September 2009
I was trying not to write about the top-topic IMF issue as it became highly boring and unpleasant. But, today I will write about the IMF. The reason is: On Monday, I participated in a limited-attendance face to face discussion meeting in Brussels on behalf of TEPAV. Around the rectangular tables, academics, some press members, EU and IMF representatives, some old central bankers and representatives of think-tanks were sitting. Majority of the participants were from Central and East European countries.
07 September 2009
In a meeting last week, a businessman said "We also need an economic opening." This sentence is a nice summary of the current economic situation. There exists an important problem. If we do not fight with it, it will grow and will be excess baggage for Turkey's future. It is necessary to fight with the problem; but how? What if we make the problem more complicated trying to solve it?
Limited things can be done in the short term
03 September 2009
The time and the pace of the recovery from recession are now out of our control even partially. If we could have taken the control and make some decisions at the end of 2008 where the crisis intensified and potential effects became apparent, we would now have the control. Now, this is not a possibility. The main reason is the current level of the budget deficit and the risk of further increase in the deficit if no measures are introduced. The most concrete evidence for this are the latest raise in the electricity price and the discussions focused on health expenditures. It seems that the financial structure of the public enterprises operating in electricity market is so corrupt that such a huge raise in electricity price was introduced.
Time for a new discourse
03 September 2009
I still do not understand how Turkey will at least grow by a rate close to historical growth rate of 4.5 -5 percent in the couple of years ahead. And I guess this is not my fault since we do not have a credible economic policy yet. If we had one, I would try hard to understand why. Turkey's Transition Program implemented after the 2001 crisis proposed a coherent framework: to rescue banking sector which is about to get drawn; to discipline the unsustainable fiscal policy and reduce public debt; to implement floating exchange regime as a shock absorber and ensure monetary discipline; to restructure and strengthen the economic institutional structure to protect the economy from similar problems in the future.
Fiscal rule and independence
31 August 2009
There is a vast literature for the economic policies implemented for politic purposes and the results of those policies. Numerous theoretical studies have been conducted in this field. In addition to this, the relation between the practical results and developed theories has been investigated intensively. Common findings of studies that are widely known and that thus turned into 'classics' in this field is: