When there was no global crisis, the main focus of this column was how the economic problems of Turkey can be dealt with. The results of the studies and discussions carried out by a group of colleagues elaborating on these problems were frequently reflected in this column.

The need for a new reform wave aiming to solve structural problems was obvious. We referred these as 'micro reforms' or 'second generation reforms'. Then, a number of people embraced the 'micro reform' argument, which was a favorable development.

Unfortunately, those beautiful days are now over. Now, we have left aside the structural problems. There is a crazy river flowing; and we hope that we will return back to discuss the structural problems once we cross the river. Yes, today is the day to discuss how we can cross the river. But before that, let us put down a note that will be useful on the other side of the river.

In January 2009, Turkey had a current account surplus of 291 million USD. Of course, this does not mean anything alone. After all, it refers solely to one month. Furthermore, in years with significantly high current account deficits, there were months with current account surpluses. However, this is beyond a one-month current account surplus alone. This is a development that we expected relying on our previous experience.

In 1994 and 2001, Turkish economy contracted significantly. In those years, the economy has current account surpluses. On the other hand, the economy has current account deficits in years with rapid growth. Of course it is not only the rate of growth that determines the status of the current account. For instance, as observed recently, energy prices are important determinants. However, it is obvious that there exists a close correlation between growth rate and current account deficit.

This is a crucial structural problem of the Turkish economy; this issue was pointed out in several columns on 'micro reforms'. We put out the issue as follows: Level of domestic savings is not high enough. The amount of resources needed to increase the level of investment and production is high below the level of current savings. Therefore, we have to use the savings of other countries. In fact, the 'current account deficit' phenomenon is also defined as 'the difference between the level of domestic investments and domestic savings' in textbooks.

Unfortunately, this structural problem was shed by unproductive discussions: "If the economy had current account deficit, there certainly existed 'high interest rate, low exchange rate' policy. Monetary policy was wrong." Such a simplistic approach hindered the discussions that will facilitate the solution of the structural problem. As a result, the economic policy suggestion based on this unproductive way of thinking was degraded to the 'cut down the interest rate, the rest will be solved' level.

However, foreign savings do not necessarily flow toward Turkey. Here, the determinant was the risk taking appetite of the international capital. Therefore, Turkey had to try its best and improve international competiveness: How would the industrialists obtain higher quality infrastructure services at lower prices? How would the quality of the labor force be improved? How would the skills of the human capital be improved? How would the high tax burden on employment be reduced? How would research and development activities be encouraged? What did other countries taking important steps in these areas do?

And look at the current picture in Turkey: Interest rates are gradually falling down, exchange rate is high. The economy has current account surplus. 'It is perfect', right?

This commentary was published in Radikal daily on 16.03.2009