Compared with historical average growth rate, Turkey is one of the countries demonstrating the worst performance among countries in the same group. For instance, among the developing countries in the G-20 group, Turkey has the second worst performance in this regard following Mexico. It is estimated that in 2009, Mexico's growth will be 9.8 points below the historical average while this difference is estimated to be 9.5 points for Turkey. A similar trend can be observed for large Central and Eastern Europe economies. For instance, for a vast majority of the countries in these groups the mentioned rate stands below 5 points. Why are we facing such an adverse outcome despite all the steps taken after the 2001 crisis with the aim to ensure stability?

The answer is in fact hidden in the question itself. As you might note, the question contains the phrase 'with the aim to ensure stability'. Therefore, one answer to this question will be: ensuring stability does not is not enough to sustain it. You can ensure stability in an effort to put out the fire through budget discipline measures. For instance, you can raise taxes on certain goods and services to get rapid results; because there is nothing else to do right after the termination of a crisis. This is exactly what we did after the 2001 crisis. However, quality of the fiscal discipline is also of importance. When the operation to put out the fire ends, quality of fiscal discipline has to come the next. Considering Turkey, you need a tax system which will ensure that taxes will be collected from everybody, not only from who you catch. This was not achieved. This is the first reason.

Assume that you have passed this phase; the stability you ensured is sustainable. This is not necessarily enough to reduce the vulnerability of the economy against a huge shock like the global crisis. For instance, your fiscal and monetary policy is disciplined and this way you assured stability. However this stability applies only to budget deficit, public debt, borrowing maturities and inflation. When external conditions are 'normal', such stability can also ensure a 'reasonable' growth. However, if domestic savings rate is not high enough, you need foreign savings even to secure such 'reasonable' rate of growth. But when a large external shock appears, foreign fund inflows (foreign savings) come to a halt. What is more, since you cannot find new foreign funds to repay your existing debts, you have to use your own resources. As a result, you fail to achieve that reasonable growth rate.

Therefore, it is of importance how the historical growth rate is achieved. Moreover, you may not even be content with that growth rate. In that case, you have to achieve the 'reasonable' rate without relying on foreign funds. In addition, you have to seek ways to improve the 'reasonable' growth level. You have to advance upon 'binding' constraints preventing an improvement in the potential growth rate. To put it differently, you must have implemented a reform package that has an order of priority. By the mid 2006, Turkey was ready for such reform process. However, the process was not initiated. This is one of the reasons, i.e. the second answer for the question put at top.

I saved the most obvious reason. If you get behind in taking the measures against the contractionary impacts of the global crisis; if the measures you take fall behind in quantity or target partially at wrong areas, the economy will be 'left alone'. However, economic policies known to be effective in the short term are designed and discussed for years for such rainy days. Economists have worked hard for years for our sake so that economies harmed severely will never be left on their own, and thus reached some conclusions. These outputs must be utilized. Nonetheless, Turkey did not do so and left the economy alone in front of the crisis. This is the third reason.

This commentary was published in Radikal daily on 09.11.2009