Lately, we observe an intense data flow. Today, I would like to assess this briefly. Not all of them, the ones pertaining to the channels transmitting the effects of the global crisis into Turkey as well as their results.

First channel: Due to the steep fall in the global income, demand for goods Turkey exports would fall down. Latest export data; January export data as announced by Assembly of Turkish Exporters (TİM) says that total exports fell down by 28 percent as compared to same month in 2008.

Second channel: We prospected a fall in the amount of credits extended by the banking sector. Latest data is for January 23. It reveals that total credit volume of deposit banks is decreasing; there is 4.5 percent decrease since October 24. There was a similar tendency for the consumer loans, a sub item of total credits before latest data was announced. Though it does not give a clue whether that tendency has changed, latest data on January 30 reveals that weekly consumer credit volume has increased slightly.

Third channel was the confidence channel; in such an environment, we expected a decrease in both consumer and investor confidence. Both indicators have been showing a downwards movement. Therefore, the indicators devised to calculate these were varying in historically low levels. Latest data signals some slight recovery.

Fourth channel: Both Turkish banks and companies are encountered with a considerable amount of foreign debt becoming due in 2009. We argued that they will have hard time in obtaining new foreign debt sufficient to pay existing loans. In other words, they would have to pay some of the foreign debt out of their own resources. And this will contract balance sheets and thus have a contractionary effect on both production and employment.

With the balance of payments data announced this week, we had the chance to see the picture for December 2008. Below, you can see two tables that I already used in previous columns with slight differences. Tables give monthly averages for foreign indebtedness and repayment for banking sector and corporate sector, respectively. Unfavorable developments are continuing as expected.

The effects of these developments on production and employment have widely been commented on lately.  I will just give a couple of figures. In December, industrial production diminished by 17.6 percent as compared to that in December 2007. In January 2009, capacity utilization rate fell by 16.5 points to 63.8 percent as compared to January 2008. Latest unemployment data is for October 2008 indicating a 1.2 point rise to 10.9 percent as compared to October 2007.

Table 1: Banks: New External Borrowing and Repayment (Million dollars, monthly averages 2004-2008)

Table 2: Firms: New External Borrowing and Repayment (Million dollars, monthly averages 2004-2008)

This commentary was published in Radikal daily on 12.02.2009