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Unfortunately, it seems like we are right...
In general, when conducting macro-level analysis, we group the economy under sectors; for examples public sector, the central bank, banks, corporate sector, households and outer world. In short, a wide-range consolidation is made. For instance, the behavior of a group of companies is examined under the context of an individual company. At times, the consolidation moves further decreasing the number of the sectors examined.
In times of crisis, it is quite beneficial to talk with the representatives of different sectors. It is highly informative and reflects the differences between the perceptions about the existing conditions. There are of course variations within a single sector; however, it is also important to determine a common opinion or behavioral pattern dominant within the sector. The mentioned difference of perception is that between different sectors.
The sharpness of the differences between the sectors considering their perceptions about the crisis we are going under is especially striking. Lately, I had chance to talk and discuss with people working in these sectors in various levels. This is the impression I got: Corporate sector is quite anxious and even worse is afraid of the near future. I am not talking about traditional complaints such as 'the market is depressed'. There is an anxiety far beyond that. They are actually living in the market and transactions have been totally stopped. Transactions in exchange of checks are said to cause problems. Or, the main dealer does not provide the dealers with sufficient amounts as it does not trust in the solvency of the dealer. Traditional installment sale practice between main dealer and other dealers is also disappearing. Some complain that banks are requiring additional guarantees for existing loans. When you sum this up, it appears that the corporate sector is going through a serious cash flow problem. And there is a risk that the problem becomes severer. Even if you disregard the existing or possible problems of the banking sector with the outer world, what the corporate sector is undergoing shall be taken into account by the banking sector.
The impression I got from the banking sector is in another direction. A mood that they have got over the worst part can be observed. They have a more optimistic vision for the future than the corporate sector. For instance, they believe that the ratio of the nonperforming loans to the total credits, which is currently quite low and around in line with the international standards, will not distort to a high extent. It is understood that the measures taken and interest rate cuts introduced by the Central Bank significantly contributed to the creation of a perception in this direction.
However, global analysis and future prospects are considerably different than this perception. Just a week ago, the IMF revised the growth estimations for 2009 downwards. Predominantly, a significant contraction is estimated for the EU countries. It is also estimated that the US economy will not perform any better. The estimations also state that fast-growing economies like the Chinese economy will as well face a fall in the growth rate. Furthermore, it is estimated that the fund flows towards countries like Turkey will fall from 929 billion dollars in 2007 to 165 billion dollars in 2009. Commercial bank credits, a sub item in the capital flow reveal that banks will be net debt payers.
Some doubts appear in mind when hearing the statements and expectations resulting from optimistic perceptions. Questions like "Am I exaggerating the current situation?" or "Am I over-pessimistic?" come to my mind. This exaggeration or pessimism is not preserved in my mind but is conveyed to you through this column. This is a huge responsibility.
And the doubts seem invalid. Searching on the internet and reading the international analysis and comparing them with those written just a few months ago is enough to invalidate this doubt. It seems that the problems in 2009 will even transcend the estimations.
This commentary was publisehed in Radikal daily on 02.02.2009