Turkey’s sovereign rating increased relatively
Ozan Acar
23 August 2011
The impact of the global crisis was more limited on developing countries than rich countries at the core. However, the sovereign rating of developing counties is still below that of developed countries in debt crisis. Causes of this was addressed in a policy note titled "Sovereign rating cannot be upgraded without structural reforms" published on TEPAV website in January 2011[1]. The mentioned study associated the stand-still in Turkey's sovereign rating with the negative outlook of the current account deficit and budget deficit that has the potential to affect fiscal performance through various channels, and of the real exchange rate and growth volatility. In parallel with our expectations, Turkey's sovereign rating hasn't increased after January 2011 in absolute terms, though it has impr
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Why don’t we leave the exchange rate on its own feet for now?
Fatih Özatay, PhD
23 August 2011
In the current milieu of high uncertainty, the CBT must refrain from implying preference for a certain level of exchange rate. It is for sure possible to evaluate the real value of the domestic currency against foreign currencies (the nominal exchange rate adjusted to the ratio of foreign price level to domestic price level). For instance, there is a point in stating that the Turkish lira is high-valued or low-valued in real terms. The real value of the Lira is of importance for foreign trade. In short, real exchange rate is an important variable. There is no dissensus on this.
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Is the US$ 1.2 trillion bank bailout bad?
Güven Sak, PhD
23 August 2011
On the eve of the Second World War, although ten years had passed, the Depression of 1929 still had not come to an end. Most likely this business will continue; it would be wise to remain cautious. This happened here in the past as well. It happened in the US again in the middle of the crisis. During the 2000-2001 banking crisis, the Central Bank of Turkey (CBT) declared the amount of financial support in the form of overnight debt it had provided to which bank . This time it was Federal Reserve's (Fed) turn. The news was first announced the other day by Bloomberg. It was when I was thinking, "What will Fed President Bernanke do? Will he execute the third quantitative easing?" Economic decisions are more political than ever now. This development made me think that a hard task awaits us.
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It is time to devise a new policy for Turkey’s industrial zones
22 August 2011
Recently, the fiftieth anniversary of the Bursa Organized Industrial Zone (OIZ), Turkey's first OIZ, was celebrated. The fifty-year long adventure, which started with a World Bank loan in the process of the shift to a planned economy, played a major role in the industrial development of the country. Now, there is an OIZ in almost all provinces and everyone from industrialists to ordinary citizens knows where the OIZ of the province is located and what it looks like. The point about which we do not have an opinion is in which direction the function of OIZs in Turkey's economy should evolve. I believe that the answer to this question is closely related to the country's industrial policy and efforts to tackle the high current account deficit.
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Skopje 2014: The Awakening of the Macedonian Identity
Erhan Türbedar, PhD
22 August 2011
The Macedonian government continues its efforts to give the center of capital city Skopje a new face, through the Skopje 2014 Project. By means of the project, the government is trying to give central Skopje an ancient appearance, with the construction of new buildings, marble statues and renovation of the old structures. The most striking of the statues is that of Alexander the Great, set to be officially inaugurated in September 2011. Although the government makes no mention of the cost of the Skopje 2014 project, the bill is estimated between 200-500 million Euros. Some object to the excessive spending on statues in the country, plagued by a 33 percent unemployment rate and where one third of people live under the poverty line. Whereas, minorities living in the country are uneasy about
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Room for maneuver
Fatih Özatay, PhD
20 August 2011
It is useful to spare some part of budget revenues in good days, considering rainy days ahead. I was talking about the budget burden of the measures that G-20 countries introduced or undertook to introduce in the first half of 2009, when the contractionary impacts of the global crisis were felt severely in order to stimulate domestic demand even slightly and support the financial sector.
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Without QEIII more troubles ahead for Europe
Güven Sak, PhD
20 August 2011
For some time now, we are living in times when portfolio decisions are made by looking at nothing other than the wristwatch. This is one of those "all that solid melts into air" periods. Something is happening at every moment, making you jumpy. Consider yourself living in Turkey now. Syria on the south side of the southeastern border, increased PKK activity on the north side of the same border and there is the European banking crisis increasing tensions in global markets. Turkey, on the other hand, has structural vulnerabilities, becoming more visible every moment. Chilly? Definitely. Today let me focus on the deepening European crisis.
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The banking sector is the guarantor of stability.
Güven Sak, PhD
19 August 2011
A solid banking sector is a must for the sake of the real economy. It was the self-devotion of the banks that limited the damages during the 2008 crisis. The Central Bank of Turkey (CBT) recently has been stressing how important maintaining financial stability is. But since it does not state explicitly what it means by this, a failure in communication has emerged. Today let me explain my understanding of financial stability and how I assess the past and present decisions of the CBT, which seem to be contradictory. I think the latest decisions by the CBT imply an attempt to "revert to the known world." If you wonder why, please read on.
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Commenting on the exchange rate
Fatih Özatay, PhD
18 August 2011
In countries like Turkey, the officials of central banks had better not comment on exchange rate or imply a certain level. In countries like Turkey, the officials of central banks had better not comment on exchange rate since such remarks, especially when frequent, might drag them into difficulty. This time, "countries like Turkey" do not represent emerging market economies. This time, I am referring to a sub-unit of emerging market economies: those which lack sufficient domestic savings and rely on foreign savings even for achieving potential growth rates; in other words, those which generally have a current account deficit.
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Guidelines for beginners to understand civil-military relations in Turkey: II
Nihat Ali Özcan, PhD
18 August 2011
In 1999, the generals fully supported the government in making Turkey's ambition for EU membership a "state policy". They demonstrated their will by including that decision in the "National Security Policy Document". In other words, with that decision, Turkish Armed Forces (TAF) would have the same status and role as the armies of the EU member countries, and civil-military relations would be formed in accordance with those norms, once full membership is realized.
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