The number of positive opinions on both the global crisis and the Turkish economy has recently been increasing. A couple of commentaries that can be considered positively have also been published on this column. Of course it is nice to be optimistic, however, that optimism must be grounded.

It is a nice thing to see the bottom; it implies that things will not get worse. On the other hand, there is another certainty: Let us say that Turkish economy contracted 12 percent in the first quarter of 2009. Assume that, rate of contraction was 6 and 2 percent in the second quarter and third quarter respectively.  In this case it is true that we hit the trough over the first quarter; however, the economy continues to contract considerably. Shall we be happy that the economy did not contract by 12 percent in the third quarter (optimistic view) or be sorry for the continuance of economic contraction (pessimistic view)? The question is: Are we doomed to this vicious circle?

If, as we have been arguing for months and as now everyone has agreed on, the global crisis has been affecting the Turkish economy through four different channels; those channels must start to function as usual so that those good old days come back. Or, let's say, three of the channels if not four must function so well that we can conclude the problem is over for good.

First channel was that level of goods and services exports experienced a significant downturn due to fall in global income and resultant demand tightening. Therefore, the most important one among the factors to be analyzed is the signals about whether or not the global income hit the trough. In this context, EU countries are of more importance for Turkey. However, it is obvious that things should get back on track in the USA so as for the EU economies to experience a recovery. In my last commentary, I referred to views of an economist on the business cycles in the US economy. The study contained an analysis arguing that the US economy may hit the trough in May or June.

If things will not get worse for the US, it means that performance of Turkey in terms of exports, which was extremely bad recently, will not get worse. It is that simple. However, the repercussions of this 'not getting worse' case for the US will be felt in Turkey with a certain delay; this is why we say 'near future'. Furthermore, things also must not get worse for the EU and so on.

Second channel was the loan channel. There is no signal that this channel will recover in the short run; and there is no sense in developing such an expectation. The men (global financial system) have been bulldozed; even in cartoon movies it takes time for a person to get back to normal after being bulldozed.

Third was the domestic loan channel. Level of loans extended to corporate sector and consumers were turning down since October. Before the data for this week was announced, I said that the fall in total loan level has ended over the last four weeks. And level of consumer loans tended to increase over the last six weeks. On Thursday, data for the last week was announced. The outcome does not change. It is just 'five' instead of 'four' weeks for the former and 'seven' instead of 'six' for the latter. Does this imply a trend, or is this just a temporary movement? The clear answer is: I doubt it, because it cannot be argued that 'we' have been taking steps yet. In case we take steps, 'I doubt it' will turn into a 'yes, there is a high possibility that the movement turns into a trend'.

Fourth was the confidence channel. Confidence in Turkish economy hit the bottom as no worthwhile measures was taken at the national level. On the other hand, confidence indicators reflect a recovery over the recent months. Indicators still show that the level of confidence is quite low; however, there is an upward tendency. Does this continue? It of course does if we take some steps and if the rest of the world actually hit the trough. Therefore, it is just a 'cautious optimism' at issue; that is it.

I hope that we do 'some things' and things evolve in the way optimistic views argue...

This commentary was published in Radikal daily on 18.05.2009