The bankers’ job is to do banking; the administrator’s job is to administrate
Güven Sak, PhD
01 April 2011
Turkey owes its successful recovery performance to the banking system. However, these days we are angry at the banks. The growth figures for 2010 have been announced. Turkey's economy grew at a rate above expectations in the last quarter of 2010, at 9.2 percent. The overall growth rate for 2010 was also above the expectations, at 8.9 percent. In 2009, the economy contracted more than expected, by 4.8 percent. From 2008 to the present, Turkey has been firstly among the ten economies that have contracted the most and then among the ten economies that have recovered the most rapidly. At the beginning of the process, we failed to put forth a set of measures that would mitigate economic contraction. Today, we are failing to manage the rapid recovery process.
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Possible outcomes of the efforts towards fiscal discipline
Fatih Özatay, PhD
31 March 2011
The extraordinary recovery performance can be utilized to get prepared for the rainy days. To remedy the rise in the unemployment rate and the fall in production during the crisis period, developed countries in particular have loosened the fiscal policies. Tax rebates were executed, tax rates were cut and public expenditures were increased. Preceding these measure packages, they had initiated a bailout operation in order to put out the fire that surrounded the financial system. In consequence, budget deficits increased, borrowing was expanded to be able to finance the deficit and public debt hiked.
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The green revolution is closer
Güven Sak, PhD
29 March 2011
The risk of a nuclear disaster caused by the earthquake, if not the earthquake in itself, have shaken the core the belief that nuclear energy is "very safe." The Japanese earthquake has shaken up our attitude towards nuclear energy. It can only be the instant confusion that allows anyone to think that nothing will change with respect to nuclear energy after the earthquake. Those views certainly will evolve. Then, the existing plans will be postponed. After this point, no one can say "we will build a nuclear power plant in your neighborhood" without asking the residents. In fact, they should not. This is only the first impact of the Japanese earthquake on Turkey. Today let me emphasize why we are one step closer to the green revolution.
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Different aspects and breaking the routine
Fatih Özatay, PhD
29 March 2011
We then came to discuss that inflation targeting regimes must aim to promote financial stability as well as focusing on the inflation and the production gap. After I sent my commentary that criticized the accounts that considered the latest decisions by the Central Bank of Turkey (CBT) to be a "surprise", I came across to the articles of two commentators I like and follow: one on that day in the Dünya daily (Taner Berksoy) and the other in the day after in Radikal daily (Servet Yıldırım). They both argued that the CBT's decision was a surprise, too. Their interpretation of the decisions as a surprise followed from the fact that some officials said new decisions will not come until the end of March.
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What surprise?
Fatih Özatay, PhD
26 March 2011
When you make clear facts a matter of debate, you cannot save time to focus on the actually debatable dimensions of the decision. I had no doubt that we are living in a very odd country. That I was right was reiterated again two days ago. What other adjective than "very odd" can we use if the attempt to ban an unpublished book is furthered to the next step? Think about it: if the next step is to prosecute those who are in an effort to write a "dangerous" book and the people they have talked to, how can we define the characteristics of Turkey?
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Earthquakes are beneficial to the economy
Güven Sak, PhD
25 March 2011
The money circulation in the markets increases in periods following an earthquake. Immediately a rapid fund transfer mechanism steps in. I read the following years ago (I cannot remember now from which author): ""I have understood this much from this situation: "That which is good for the economy is bad for me. That which is good for me is bad for the economy." He is right once again. Are natural disasters good or bad for the human race? Have you ever thought that disasters can be beneficial to the economy? Studies indicate so.
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Economic problems ahead for Egypt and Tunisia
Fatih Özatay, PhD
24 March 2011
Turkey is facing the same medium and long term problems with Egyptian and Tunisian friends making effort towards democratization. Seventeenth annual conference of the Economic Research Forum (ERF) for Arab countries, Iran and Turkey was carried out in Antalya between March 20th and 22nd. In these conferences academic studies about the region are presented and debated. Further, experts are invited to the conference to make presentations on specific subjects. ERF is a research network based in Cairo.
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Does the Libyan path lead to Iran?
Güven Sak, PhD
22 March 2011
This time it would be wise to adopt an optimistic caution. The need for an export insurance mechanism in Turkey is increasing. Our neighborhood has been a mess for some time now. We are witnessing developments to which we are not accustomed. The military action aimed at creating a no-fly zone in Libya has increased the regional uncertainty. Therefore it will be wise to take a look at the repercussions of the activities in the region for Turkey's economy once again after the military operations. If you are interested, please read on.
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On the budget
Fatih Özatay, PhD
22 March 2011
We could have tightened the budget further to save means for rainy days and to reduce the current account deficit. We still can. The budget balance is affected severely by the general outlook of the economy. For instance, in phases of rapid economic growth, tax revenues increase even if the decision makers made no concrete attempt to this end. On the other hand, when the economy contracts, budget transfers grow depending on the prevalence of social policy decisions. For example, budget expenditures increase due to the rise in the unemployment payments. Since the relevant laws define the preconditions and amounts of such transfer expenditures, certain falls or rises in expenditures occur automatically regardless of new economic decisions.
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From 'how to raise credit volume' to 'how to reduce credit volume'
Fatih Özatay, PhD
19 March 2011
Two and a half years ago I was seeking to identify how the volume of credits bank extend could be increased. Currently I am thinking through how the latest decisions by the Central Bank can become more efficient.
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