There is a lot to deal with; for instance I would like to touch upon how inflation targeting regimes might change from now on. I have things to say in particular on the possible response of monetary policy to rapid credit expansion, as the IMF has opened to discussion in its last report. The Central Bank of Republic of Turkey has an important experience from 2004. The 'foreign fund growth' problem must also be discussed. Conditions in the aftermaths of the global crisis is different than 2001. So in this milieu I would like to turn back to discuss why the confidence in the economy cannot be improved solely by fiscal discipline. But I also have to finish what I started. In my two previous articles I examined the latest developments in industrial production, domestic credit supply and exports. Of course other topics are much more fun but we also have to touch upon the latest developments. Today, I will shortly talk about capacity utilization rates for September and certain details about balance of payment for August. But let us remind one thing about exports first.

In my article on Sunday, I said that  as per the export figures for the first eight days of October, exports have increased significantly compared to the same period last year. However, I also reminded that the same period the year before covered Ramadan holiday and said that it should be examined whether the rise will prevail net of the impact of low level in this period. Rise in exports in the first eight days of October was 133 percent. Figures for the first thirteen days however show a 40 percent rise. This rate of increase will most probably fall down further in the coming days; however, we need to underline that exports increased for the first time after a long period. Yet, 2008 October export figures were also lower than 2007 figures; the current rise will be above that. This is something; is not it?
As September data reveals, manufacturing industry has utilized 70 percent of the installed capacity. This is 9.7 points lower than a year before. This new data is adverse in two aspects. First, capacity utilization rate for September 2008 was also lower (3.4 points) than that for September 2007. Therefore, we are facing a capacity utilization rate 'lower then a low level'.  Throughout 2009, capacity utilization rates were lower than a year before. But the difference was closing up since March. However, this trend broke down in September and a rise in the difference was observed. And this was the second adverse aspect. The warning I made for export performance also prevails in this regard. The fall in capacity utilization in September 2009 might be partially a result of the Ramadan holiday.

Net foreign fund usage (net foreign borrowing) of banks turned to positive in June after long. Figures for the last two months show that banks returned to 'net foreign fund transferring' position. Same is also true for corporate sector. Level of funds transferred to abroad by the corporate sector demonstrated fluctuations and then tended to fall as of May. However, level of funds transferred to abroad was quite higher in August. These are both adverse developments. Of course we cannot decide the trend based on figures for a couple of months. Nonetheless, figures do not convey a good message about the future shape of the recovery.

We will witness a recovery, but we need more data to decide the pace of it. We are in a period where many indicators move in the adverse direction. In this period it is of critical importance whether or not these figures will demonstrate a considerable recovery compared to the same period in 2008. And a wish: after all, it is quite easy to calculate data net of the number of working days and seasonal movements. It will be quite easier if TURKSTAT published net-of data simultaneously with raw data.

This commentary was published in Radikal daily on 15.10.2009