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It is good that the economic administration has left behind the denial period
Turkey, with almost a six-month delay, has for the first time faced the global economic crisis. Sorry, Turkey has for the first time "officially" faced the global economic crisis. We, as the people living in this country, have already faced the global crisis. We already knew that negative developments were taking place. It is not bad but good that the official "denial period" is now coming to an end. Credibility does not make you lose, it makes you win. It was anyway senseless to pretend that there is no problem here in Turkey while the global economic crisis was shaking everywhere throughout the world. The statements made by Vice Prime Minister Nazım Ekren yesterday ended the "denial period". This indicates that the first step toward the construction of public policy credibility has been taken. The new framework presented yesterday provides us with the opportunity to make a fresh start. What comes next is to take advantage of this opportunity. But, will this opportunity be used? At this point, a series of questions must be answered rapidly.
The first question is: That the figures were revised before the expected council of ministers revision has a positive or negative impact on the process of credibility construction? Here, the important thing is that the official denial period has ended or the internal coherence of the new framework. If there exists a solid framework, there is no problem. Figures also change in time as things evolve. The important thing is the idea that the issue is seized becomes prevalent among the public. If the coordinator seizing the issue is in control, it is basically sufficient.
The second question that must occupy minds is: Is 3.6 percent contraction target significant and consistent? 3.6 percent contraction target is significant only if a series of measures will be implemented. Therefore, economic contraction at this level can be ensured only after positive and effective public intervention. It is the quality of the measures that will attach significance to the target. As calculations of TEPAV economists suggest, Turkish economy is expected to contract by more than 3.6 percent if left alone in its course. Therefore, whether the 3.6 percent contraction target will or will not be met depends directly on the correct selection of measures and the implementation success.
Third question might be: Does 3.6 percent contraction target involve an agreement with the IMF? Yes, it does. First, the IMF agreement will not enable the Turkish economy to jump on the growth path but will limit contraction. And second, IMF agreement will finance the measures to be implemented without putting a higher burden on the public budget.
So, how realistic is the assumption/target that the Turkish economy will be back on the positive growth path in 2010 and 2011? Let this be the fourth question. We believe that the figures presented for 2010 and 2011 are not realistic. There are two prerequisites to make those figures realistic: First, the condition in 2010 and 2011 is closely related to the future course of the global crisis. And about that, there are various stories. The future course of events is not yet certain. Second prerequisite is related to the measures Turkey will take in 2009 and their implementation results. Talking about how 2009 will pass and 2010 start is not possible unless the details on measures and their results are known.
It is good that Turkey officially admitted the presence of the global crisis. Now, there are three components to be followed to see whether or not the economic contraction in 2009 will be limited at 3.6 percent: First, which measures will be taken? Second, what will be their value? Third, how will those measures be prioritized and how will the implementation process be coordinated? Unless knowing the answers for these, it is not possible to make a detailed evaluation on the 3.6 percent target.
Nonetheless, the approach is correct: Turkish economy, due to the global crisis, will encounter a significant contraction. It is not possible for Turkey to develop a national solution for the global crisis or pretend that "the crisis does not exist". It is important to identify the limits of the feasible tasks: National governments cannot develop solutions for a global crisis; but they can limit the impact of the crisis on the national economy. This is what the Turkish government is now trying to do.
The economic approach and new economic framework presented by Vice Prime Minister Nazım Ekren is positive. It is never too late to mend. Now, we have to wait for details of measures.
This commentary was published in Referans daily on 14.04.2009