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I also mentioned recently; in abnormal periods, it is not enough to evaluate the changes in production in comparison solely with the same period the year before. In addition to this, it is necessary to consider the loss of production over the period where production peeked and bottomed. This way, the loss incurred by the crisis becomes more apparent.
In addition, it is also important in how much time production re-achieves the pre-crisis level. For instance, we can say that unemployment will also be at a high level even after hitting the bottom of the production. Furthermore, we can state that the high level of unemployment will remain almost in between the two peak points.
Graph 1 shows the sum of the production levels of the last twelve months (index values) as per each month. The period covered starts with 1999 January. Let us first examine the 2001 crisis period. Industrial production peaked right before the crisis, in January 2001 and then assumed a downward trend. Between the peak and the bottom, production has decreased by 9.5 percent and the period of rapid fall lasted for thirteen months. Production bottomed in February 2002.
It took even more time for production to achieve the pre-crisis peak level. However, in September 2003, level of production exceeded the level achieved in January 2001. In short, it took thirty two months for industry to re-achieve the pre-crisis level of production. We are talking about nearly three years! Three vertical lines in the left side of the graph refer to the mentioned periods.
The last vertical line in the graph shows the last peak in production achieved before the impacts of the crisis become apparent. Industrial production reached the peak in July 2008 and it has been hitting down since then. Most recent data we have is for June. It appears that industrial sector production have been decreasing for eleven years 'for now'. When more recent data is announced, we will see that the downward trend continues.
It is quite difficult to estimate at this point how long will it take for the production to reach the level in July 2008. In the light of the existing data and the implemented economic policy, it is possible to state that this will not happen in 2010. To what extent this can be achieved in 2011 depends on whether or not a radical change in economic policy will be introduced. And about the meaning of radical change; we have discussed this issue extensively, and it seems that we will go on doing so more.
Graph 1: Industrial production index (12 months total, 1999 January-2009 June)
This commentary was published in Radikal daily on 24.08.2009