What will happen in 2010? (1)
Fatih Özatay, PhD
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
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Why did Saudi Arabia finance the World Food Summit in Rome?
Güven Sak, PhD
21 November 2009
At the beginning of this week, Food and Agriculture Organization (FAO) launched the World Food Summit in Rome. As the media suggests, the meeting was not much successful; it was referred to as a waste of time. Developed countries did not declare a concrete program to fight with world hunger. Ordinary "politician" declarations were made considering the elimination of hunger. The last issue of the Economist magazine started an article on food security with a quotation from former US Foreign Minister Henry Kissinger: At the first World Food Summit convened in 1974 Kissinger said "within the decade, no child will go to bed hungry". Now we are in 2009, and the number of hungry people rose by 100 million reaching a billion.
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How will Turkey’s exports be shaped?
Fatih Özatay, PhD
19 November 2009
My last commentary ended with the question 'What will happen in 2010?' To answer this question, it is necessary to provide growth estimations under alternative scenarios. I also pursued a similar method for 2009 at the beginning of this year. I will use that model as well for 2010. However I will start this issue on Sunday; I have to work on it a bit further. If the dominant trend in the economy is about to be replaced with another one; i.e. in turning points, it becomes harder to make estimations as mixed signals are received. This is the main reason why I postpone dealing with the 2010 estimations to Sunday.
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No fire lasts forever
Güven Sak, PhD
17 November 2009
At the point we arrived, it will be useful to assess the situation of the climate of economic recession. The major point of discussion nowadays is: Did the signals of economic recovery spreading around the world in waves come up automatically in itself or did the measures implemented by governments had an effect? What do you think? Let us admit that this question alone is of critical importance for Turkey, because Turkey ranks at top of the list of countries that did not implement worthwhile measures during the crisis. Or, did the Turkish government do the right thing? The answer is: no they did not. Let us see why.
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We are still transferring funds abroad
Fatih Özatay, PhD
16 November 2009
Will Turkey achieve the widely expected positive growth in the fourth quarter of 2009? What will be the growth rate in the coming quarters? To answer this question, I addressed the changes in domestic credit volume yesterday. I will also go after the same questions.
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Credit market gives mixed signals
Fatih Özatay, PhD
15 November 2009
Generally accepted opinion was that we would see positive growth rates as of the last quarter of 2009 both for industrial production and national income. The main idea behind this was: we calculate the growth in the current period in comparison with the growth in the same period the year before. Turkey's economy contracted in the same period the year before. So, it is quite easy to achieve positive growth in comparison to that period. The second reason is that slow recovery was projected for developed economies as of the second half of the year. In that case, the volume of goods they imported from us would have been expected to rise.
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Following Brazil, Taiwan also decides to tighten foreign fund inflows. Why?
Güven Sak, PhD
14 November 2009
So, what do we do now? Do we wait for a third incidence to judge a conclusion as per the principle "One is a blip, second is a coincidence, third is a trend"? Or will we start to take the ongoing process seriously? Capital controls used to be blamed. But now, they are not considered as bad. Have you noticed that the IMF, guardian of the global system, has not pressed a motion of censure yet? We believe they are also trying to figure out. What is going on? Why is that so? What is the message lying behind?
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Does the expected recovery take place?
Fatih Özatay, PhD
12 November 2009
In the last two days, important production data was announced: September industrial production index and October capacity utilization ratio. These two series in general move together. I said in general because it is harder to calculate the capacity utilization rate in particular for some certain sectors as well as for factories that produce various commodities in one facility, as observable in almost all sectors. Therefore, small fluctuations in the capacity utilization rate might not give sufficient information. We had better examine larger fluctuations. When fluctuations above a threshold level are taken into account, the parallelism in the movements of the two indicators strikes immediate attention particularly as of 2007.
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Or is Mr. Erdoğan not completely wrong? How about the caches of firms?
Güven Sak, PhD
10 November 2009
Do you follow the Asian economies nowadays? They are performing really well. In Asian economies, exports are quite important. Yet, world trade does not reflect an astonishing recovery. So, looking at the impressive performance of Asian economies, one wonders what goes on. What is that which they have but we do not? Is it that the caches of firms there are wider than ours? Honestly, what does the firms' caches talks put into our minds by Honorable Prime Minister of Turkey imply? Or is not Mr. Erdoğan completely wrong? How about the caches of Turkish firms? Let us see where do we head when we ask questions one after the other.
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Turkey was affected severely, because...
Fatih Özatay, PhD
09 November 2009
Compared with historical average growth rate, Turkey is one of the countries demonstrating the worst performance among countries in the same group. For instance, among the developing countries in the G-20 group, Turkey has the second worst performance in this regard following Mexico. It is estimated that in 2009, Mexico's growth will be 9.8 points below the historical average while this difference is estimated to be 9.5 points for Turkey. A similar trend can be observed for large Central and Eastern Europe economies. For instance, for a vast majority of the countries in these groups the mentioned rate stands below 5 points. Why are we facing such an adverse outcome despite all the steps taken after the 2001 crisis with the aim to ensure stability?
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