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    Growth rates in 2009 and 2010
    Fatih Özatay, PhD 29 June 2009
    Growth rate for the first quarter of 2009 will be announced this Tuesday. The announcement will not involve anything new. Everyone knows that the figures to be announced will indicate a significant contraction in the economy. What is more, expected rate of contraction is a two-digit figure. Therefore, the important thing is what is going to happen from this point onwards. [More]
    Others’ crises, our crises
    Fatih Özatay, PhD 28 June 2009
    We have been spinning in terms of economic policy to a certain extent since 2006 but more prominently since 2007. For instance in 2007 public budget deficit started to go up and rose further in 2008 as local elections were near. We did not encounter the global crisis at an advantageous position. [More]
    Does it become hard to enable global growth it the bride shortage in China is not solved?
    Güven Sak, PhD 27 June 2009
      This week 2009 Global Development Finance report of the World Bank was discussed at TEPAV. Here you are three conclusions to be drawn from the meeting: First, 2010 will be better than 2009. Second, the recovery to take place in 2010 will not offset the damage created over 2009. Third, the source of global growth will be domestic markets; in particular Chinese and American domestic markets. If you like, let us switch to a more amusing topic. Source of growth will be domestic markets, and to this end consumers of countries with large domestic markets and in particular Chinese consumers will have to consume more and save less. However, a study published in June 2009 expressed that high domestic savings rate of China stemmed from a highly structural factor. High savings rate of China was clo [More]
    Misfortune for us, fortune for monetary policy
    Fatih Özatay, PhD 25 June 2009
    With respect to the global crisis, it appears that the worst part is most likely over. With respect to employment and growth, however, it becomes apparent that the recovery will take quite long. In particular for emerging market economies where level of savings is not sufficient and therefore investments and thus growth rate cannot be scaled up at the desired level, this problem is expected to intensify. To compensate for the insufficiency of domestic savings, it is necessary to use savings of "the others". And the savings of the others refer to 'international capital flows'. Institute of International Finance (IIF) recently announced new estimates on capital flows. Capital flows toward emerging market economies attained a record high with 888 billion dollars in 2007. This amount dropped t [More]
    Why is it necessary to be on the safe side in 2010?
    Güven Sak, PhD 25 June 2009
    This week we have been touching upon the question "How will 2010 be in global terms?" We have first addressed the issue with some information took place at Reuters: the IMF has revised upward the global growth estimate for 2010. This was the fifth revision by the IMF about growth rate in 2010. Estimates have been revised three times since April 2008, all downward. Now, for the first time the estimate was revised upward.  A while ago, IMF expected 1.89 percent growth for 2010. Now, it says 2.4 percent growth is expected. In the meanwhile, the World Bank announced that they expect 2 percent growth in 2010 (By the way, the World Bank revised 2009 growth estimate for Turkey to 5.5 contraction. Remember that the estimate announced by TEPAV in March 2009 was also 5.5 percent contraction.). Now, [More]
    How will 2010 be?
    Güven Sak, PhD 23 June 2009
    People go on not liking the economists. Admit that no one knows how we will exit from this phase. And we naturally do not like the economists who somehow cannot tell us the exit. But nowadays, there spread glimmers of hope. It is wise to evaluate this issue on a solid basis. What do people want to say by cherishing hope for 2010? A couple days ago, IMF's 2010 growth estimation to be announced at the G-8 meeting took place on Reuters. According to the estimation, world's national income will go up by 2.4 percent in 2010. Let's see what this number means and make an evaluation about 2010. [More]
    Correct policy, wrong outcome
    Fatih Özatay, PhD 22 June 2009
    There is a consensus among most economists on the future of the global crisis: we left the worst part behind. The disagreement is about the pace of the recovery to be observed. Since the worst part is most probably left behind, it is now time to discuss the 'period before the worst part'. Let us begin with monetary policy. [More]
    Non-performing loans
    Fatih Özatay, PhD 21 June 2009
    The second set of measures announced this week was directed to credit cards. As per the new decision, debt of the credit cards which turned to be non-performing after May 31 2009 will be restructured if the owner of the card applies to the relevant bank within 60 days. As a result of the structuring, high penalty rate enforced as of the date the debt of the user becomes non-performing is deleted, interest rate for the debt is recalculated based on the deposit interest rate and the debt is subjected to an installment plan. [More]
    What if surveys steer the economic administration?
    Güven Sak, PhD 20 June 2009
    What do you think? What happens if public opinion surveys would be indicative about how the economy will be administered? According to the article Professor Christina Romer, Chair of the US Council of Economic Advisers, wrote in the English the Economist this week, bad things happen. Furthermore, as Romer suggests, this was already observed in the past, in 1937's America. And the results were bad. Unemployment, which began to fall down as of 1932, go back to rise again due to the introduction of contractionary policy, which was "wrong". Recovery was pushed back to the end of Second World War. According to Professor Paul Krugman, on the other hand, there is no need to go back to 1930s: Check the Japan of 1996 and the expansion of the depression period because of "wrong" decisions. But, what [More]
    Thoughts foreign exchange credit gives rise to
    Fatih Özatay, PhD 18 June 2009
    Over the period from the beginning of June important economic decisions have been announced. I believe that the mentioned decisions are favourable in general. However, this judgement does not mean the decisions pose no risks nor have no deficiencies. In this context, I would like to address the decisions concerning foreign exchange credit. [More]