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Statistics speak louder than words
Turkey performs poorly also in terms of GDP growth; ranking eleventh in growth and first in volatility.
It is clear that long-term trends augur bad for Turkey. The income gap with rich countries is quite high and it does not seem to narrow down. Government officials therefore keep away from such comparisons. Their discourse is more like “the economy has grown remarkably compared to Europe; unemployment rate is radically lower than that of Spain; public debt is lower than the European average; inflation is incomparably lower than what it was before 2003; Turkey will be the tenth largest economy by 2023, if God lets” etc.
Nevertheless, other people spread their word as well. And they talk on the basis of “useful” statistics, not those which suit their book. Therefore, they are not as optimistic as the officials about the economic outlook of Turkey. More importantly, the figures they take into account include those on indicators which Turkey is proud to have improved in its own account.
The Federal Reserve (FED) has released a report last week, based on the Chair Yellen’s statements at the Congress. The report was highly quoted by the Turkish media as two of the total 35 pages were on the possible impacts of the FED decisions on 15 emerging market economies. Turkey was cited as the one which will be affected the most.
In order to assess the impact of the FED decisions, the report develops a fragility index which is based on six indicators. It does not rank countries by their performance in individual indicators, however. For I was unable to get to sleep because of curiously, I did the ranking myself for each indicator. The 15 countries cited in the FED report are Brazil, China, Chile, Colombia, India, Indonesia, Malaysia, Mexico, the Philippines, Russia, South Africa, South Korea, Thailand, Taiwan, and Turkey. I was not able to access some of the required information on Taiwan. I assessed the figures for the rest; different than the FED for 2008-2012 period. Based on the averages for this timeframe, this is how Turkey ranks among 14 countries:
Twelfth in terms of FX reserve to GDP ratio (the higher, the better); first in foreign debt to exports ratio (the higher, the worse); fourth in terms of the change in credit to GDP ratio over the 5-year period (the higher the worse as it exacerbates financial risks); second in terms of average inflation in the past three years (the higher, the worse); eighth in public debt to GDP ratio (the higher, the worse); and first in current account deficit to GDP ratio (the higher, the worse).
So, with a fragility index composed of the above indicators, Turkey becomes the number one fragile country. Following Turkey are Brazil, Colombia, India, and South Africa. As you might remember, I focused on the 2008-12 period due to the sharp decline in GDP growth as well as a more volatile growth outlook compared to the 2002-07 period.
Yet, this is not the only problem here. Turkey performs poorly also in terms of GDP growth; ranking eleventh in growth and first in volatility.
What can I say? Statistics speak louder than words.
This commentary was published in Radikal daily on 18.02.2014