Once again on confidence
Fatih Özatay, PhD
05 April 2009
We all know that among the main determinants of consumer and investor behaviors are the confidence in the future of the economy. It is both what economics theory says and what we observe in things going around us. The same result is also observed if the things going on around us are examined in a text book style utilizing some technical models. Confidence is a significant determinant of private sector investments. Applied studies show that, in such environments, 'let us wait and see, the we do what is necessary' type of approach is quite prevalent among consumers.
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Crisis crier or justified warnings?
Fatih Özatay, PhD
02 April 2009
There are two arguments about the crisis and they are almost bonded to each other. I think they are really interesting. These arguments were stated politically. However, when taking a closer look on them, it is quite weird that these arguments were stated 'even' politically. In other words, the interestingness stems from this weirdness. First is the known 'The crisis was not our fault' argument stated in response to rapidly increasing unemployment rate and falling production levels. Second is the accompanying 'However, 2001 crisis was the fault of current opponent parties' argument.
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So, how will the IMF's tradition change?
Fatih Özatay, PhD
30 March 2009
While talking about reconstruction of institutions like the IMF and the WB and redesigning the global architecture, in the G-20 meeting to be held in London it is beneficial to address two points that are less assertive will be highly important for countries like Turkey. Both points are closely related with each other: Grading systems of credit rating agencies and how the new opening of the IMF will accord with the IMF culture.
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Main reason behind the perception delay
Fatih Özatay, PhD
29 March 2009
There are various features distinguishing the latest crisis from the previous ones (1994 and 2001 crises). The previous ones originated from Turkey, current one originated abroad. This crisis implies that the amount of capital transferred to Turkey and similar countries will decrease significantly. As estimations suggest, the amount of funds will fall down from 900 billion USD in 2007 to 200 billion USD in 2009. On the other hand, in previous crises, Turkey managed to attract capital thanks to the programs implemented. Now, even if we implement a comprehensive program, the amount of foreign capital that can be attracted is quite limited.
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For those waiting at bus stops
Fatih Özatay, PhD
26 March 2009
An expression in the election campaign was quite impressive and was based on the distinction between 'those riding jeeps and those waiting at bus stops'. While I was writing this story, television news announced that fifth measure package will be announced. It is said that the core of the package will be formed of the establishment of a loan guarantee system that was the top priority in the to-do list referred to in this column since September.
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We will spend; but for what?
Fatih Özatay, PhD
22 March 2009
80 percent of the production of the automotive sector is directed to exports. As it is considered that the tax cut has nothing to do with exported products, it is immediately identified that the announced measures is related only to one-fifth of the total production of the sector. On the other hand, more than half of the vehicles sold in domestic market are imported. Therefore, tax cut is to a high degree in favor of imported vehicles.
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Tax cuts and devil’s attorney
Fatih Özatay, PhD
19 March 2009
For a long time, measures to recover sectors that go through hard times due to the crisis have been insistently demanded. Furthermore, it was argued that the government is to focus on measures of this type. Recently, tax cuts were introduced for some products and the media started to publish stories on how the number of car trucks departing from Bursa increased and on the consumers forming queues in front of retailers.
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Low interest rate-high exchange rate: current account surplus
Fatih Özatay, PhD
16 March 2009
When there was no global crisis, the main focus of this column was how the economic problems of Turkey can be dealt with. The results of the studies and discussions carried out by a group of colleagues elaborating on these problems were frequently reflected in this column.
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Fourth economic package has good intentions, but…
Fatih Özatay, PhD
15 March 2009
On Friday, 'fourth economic package' was announced. Since it is the fourth package, there must have been three packages announced earlier. I do not want to be unfair at this point, because I remember the third package. On the other hand, my attitude is not that unfair at all. First two economic packages, God knows whatever they were, did not occupy the national agenda and thus my agenda. And the third package was a regular 'mixed' law involving several decisions from all kinds.
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Burden of the measures on budget
Fatih Özatay, PhD
12 March 2009
In my previous commentary, I stated that if the current global situation continues and a new measure package is not announced, the economy will contract by 6.5 to 8.5 percent in 2009. But, there were other scenarios as well: the rate of contraction depended on export performance, global risk-taking appetite, consumer confidence in the economy and the amount of credits extended by banks.
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