Estimates suggest that Turkey will be the only country in the Asia-Pacific region where growth will be halved and inflation will increase by 50 percent.

You all know that we are angry with Standard and Poor’s (S&P) lately. First, out prime minister, who is from the Black Sea region said, “I do not know the S&P.” Like in an anecdote from the Black Sea region: Temel lent Dursun some money and never got it back. He reminded Dursun of his debt, first implicitly and then explicitly, but Dursun did not seem to care. Having run out of patience, Temel sued Dursun. It appears that back then the court system was not like it is today. Otherwise, Temel would not have gone to court as it is the best way to guarantee that you will not get your money back. Anyway, in the courtroom, the judge asked Dursun, “Don’t you have any shame? You borrowed from your friend and now you are pocketing the money. And he is your friend since childhood, right?” “You must be joking,” Dursun replied. “I do not know the man you are pointing at and I did not borrow any money from him.” Hearing his childhood friend lying for some pittance, Temel said, “Your Honor, I don’t know him at all.” Isn’t it just like the anecdote?

Anyway, the day before, the usual media broadcasted fabricated news. According to this, S&P said in response: “We beg you, please don’t get us wrong. Our analyst did wrong to you out of inexperience. We have issued an inexplicable report on Turkey. It’s our mistake. But do not worry; we have immediately fired that clumsy analyst. Please do not abandon us because we cannot live without you!” Yesterday, S&P denied the news and said that they had not made such a statement. I think they were overwhelmed with the domestic policy dynamics of Turkey. During Berlusconi’s rule in Italy, the tax audit police raided the S&P office. It seems that the S&P is soon to receive a court order in Turkey as well. And yesterday, the UNESCAP report was released in 30 countries. According to the report, a negative differentiation from Asia must be expected for Turkey in 2012. Estimates suggest that Turkey will be the only country in Asia-Pacific region where growth will be halved and inflation will increase by 50 percent. Of course, these are only estimates and can prove wrong, but this is what people think. Just like S&P. As you see, we are in a “the Turk’s only friend is another Turk” position here.

Let me talk about UNESCAP. It stands for the United Nations Economic and Social Commission for Asia and the Pacific. It is organized to enhance cooperation across the Asia and the Pacific region. The headquarters of UNESCAP is in Bangkok. It releases an annual report on the countries in its area. The year-end estimates for 2012 were covered in the presentation made yesterday. UNESCAP covers 30 countries, including China, the fastest growth of the region and the world in 2011. Turkey, which recorded the second fastest growth in the region, is also within the scope of the UNESCAP study. The report estimates that in 2012 China’s growth will decrease from 9.2 to 8.6 percent and Turkey’s growth will diminish from 8.5 to 3.2 percent. Even if the estimates prove wrong and Turkey’s growth rate is halved only, the rate appears as 4.3 percent. Still bad.

But why? China is a high-growth country with high domestic savings. Turkey is a high-growth country with low savings. Gross domestic savings in proportion to GDP is 50 percent in China and less than 15 percent in Turkey. Turkey grows rapidly not by its own means, but by funds from abroad. It invests relying on international sources, not on domestic ones. I am extremely curious how the new investment incentive system is going to reduce the current account deficit while raising investments. In fact, a regular Introduction to Economics course gives the answer to this question. The current account surplus of China equals approximately 3 percent of its GDP. And the current account deficit of Turkey is 10 percent of the GDP. This high current account deficit makes Turkey’s economy vulnerable to any external development. And we are talking about 2012, when hikes in oil and natural raw material prices are expected and the direction in which the European crisis will evolve is uncertain and the future of Syria and Iran crises are unknown. What else could S&P do under such circumstances?

Do you really think that the world will stop revolving just because you said “stop the world, I am getting dizzy.” Do apples have to like you just because you like them? You must be kidding me!

This commentary was published in Radikal daily on 11.05.2012