What does credit rating serve for?
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.
This time there were one million people after the iron rice bowl
05 December 2009
Let us put it more straightforward. Last week one million forty thousand people took the civil servants selection examination in China. 2010 program envisaged that 15 thousand people will be employed; but one million forty thousand people took the selection examination. The exam was held in 44 centers. Last year, 770 thousand people had taken the exam. The number of positions to be filled was around 13 thousand 500 in 2009. I heard about the news from the centerfold photograph of the British the Guardian and I could not stop wondering. Here in Turkey, we have more important concerns as you all know; we are so busy with going at hammer and tongs that we do not have the time left to take a look around. In an environment where everyone, including the Prime Minister, fights with passion with h
Did the contraction period end? How will we measure?
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.
Or should we write Dubai with a W?
03 December 2009
Have you ever visited Dubai? Those who did know how unreal it looks: it is like Disneyland. There is nothing genuine; it is all imitation. At least this is the impression I get. Liquidity abundance before the 2008 crisis led to a real estate madness also in Dubai. It was when those huge buildings were constructed. It was then when the fake city called Dubai rose over the desert. Back then, money could make things happen. You could carry out an activity worth hundred dollars with only one dollar. Payback time came along with the crisis. On the eve of the Sacrifice Festival, Dubai World, public company administering these activities in Dubai, requested to delay debt payments for six months. Asking a six month delay in effect implies a call to restructure debts. Minister of Finance of Turkey,
Another slap in the face of the global credit market?
30 November 2009
For a while we are mainly hearing bad news. This implies that the growth estimations for 2010 involve downward error risk as the main scenario on which estimates that came to light so far are based assumed that developed economies would recover moderately. This assumption is involved, for instance, in the Medium Term Program introduced a couple of months ago. Since mid-November, I have been constructing some scenarios for 2010, tried to examine the exogenous conditions that will affect Turkey's economy and provided alternative growth estimations. My basis scenario also made such an assumption.
Protecting the poor: How?
29 November 2009
Global financial crisis has underlined once more an important fact: Credit flows from financial to real sector moves to a large extent along with the volume of economic activity. When the economy is growing rapidly, credit volume expands rapidly due to the prevalent optimistic climate as both appetite of banks to extend credits and credit demand by corporate sector and consumers increase. On the other hand, when the economy is in rapid contraction, credit volume also falls down. In macroeconomic terms, credits come to a halt exactly when they are needed to stimulate demand.
Need for automatic stabilizers
26 November 2009
On 29 September, TEPAV, the World Bank and UNICEF held a press meeting to introduce the report based on a survey carried out jointly. The findings of the Turkey Welfare Monitoring Survey as discussed in this press meeting were quite provoking. Adverse effects of the crisis were not limited with the rise in unemployment. Majority of the workers, especially those in informal jobs and in self-employment, stated that they experienced a drop in their income. Survey conducted in Adana, Ankara, Istanbul, İzmir and Kocaeli provinces indicated that households reported various mechanisms to cope with the outcomes of the crisis. For instance, almost half of the parents in poor families stated that they had to reduce the amount of food for their children.
Have you ever looked at Turkey with scrutiny?
26 November 2009
Things might escape from attention within the daily struggles, but they should not. Things might be shaded by the severity of the power struggle; but they should not. Pessimistic discussions focusing on elections might upset you; but they should not. Politics might be in opinion nowadays that it is useful to establish the impression that the history of full of dark pages. But this is not completely true. The most important indicator for this is the achievements of Turkey: Turkey is a unique actor in its region; it is highly different than all other countries of the region. Have you ever scrutinized Turkey lately? Let us do this today and enter the Sacrifice Festival with higher hopes.
What will happen in 2010? (2)
23 November 2009
Yesterday I presented the basis scenario that I think will apply in 2010. In brief the scenario said: Over the last quarter of 2009 and the first half of 2010, the volume of funds banks and firms transfer abroad will drop moderately. And by the second half of 2010 net foreign debt usage will be zero. Global risk appetite (measured by VIX index) will remain at the current level. In line with the framework I discussed in the previous commentary, foreign demand will rise moderately as of the last quarter of 2009 in comparison with the year before. Turkey's goods and services exports in real terms will rise slightly below 1 percent in each quarter compared to the same period the year before. During the last quarter of 2009 as well as over 2010, consumer loans will grow in real terms by sligh
What will happen in 2010? (1)
22 November 2009
Now it is time to answer "What will happen in 2010?" question. Before estimating the pace of growth in 2010, it is necessary to form some scenarios. Determining the pace of growth under each scenario is more significant than sticking to a single figure. First, let me say that I worked with a quite simple model. It is easy to make it more complex. However, I picked the easier way in purpose: I used this model before and provided growth estimations for 2009 under different scenarios. As the global crisis affected Turkey through four different channels, each of these channels must be included in the model so that a significant result would be reached. To put it differently, exports (foreign demand), net foreign borrowing (global liquidity and risk appetite), domestic credit volume and the con