Another duty loss?
Fatih Özatay, PhD
05 September 2010
I would like to start with the commentary of Hasan Ersel published in Referans daily on September 1st. He examines by various angles the decision that cuts the interest on the credit extended to artisans through Halk Bank from 13 to 10 percent as of September 1 and that shares divides the burden of the cut equally between the Treasury and the beneficiary of credit.
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Rise in profits of the corporate sector does not necessarily imply that things are on track
Güven Sak, PhD
31 August 2010
My favorite news features from the last week was those which read "We could not see what the Honorable Prime Minister saw; we did not notice that the crisis missed Turkey." The features were related with the rising profit rates of the corporate sector. But first, let me what I think: I call this the 'our elephant needs company' syndrome. Do you remember this Hodja Nasreddin narrative? It was back when Timur 's army oppressed the whole Anatolian region; i.e. it was after the Battle of Ankara in 1402. Timur wins against Bayezit I and tyrannizes the Anatolia. In the meanwhile, he sends an elephant to the village where the Hodja lives so that it can be fed and taken care of. But the residents of the village are tired of taking care of the elephant as it eats all they have for their subsistence
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CBRT needs a new implementation framework
Fatih Özatay, PhD
19 August 2010
The following sentences are retrieved from the second page of the first inflation report published by the Central Bank of the Republic of Turkey (CBRT) in 2010: "The rise in inflation can be attributed to several temporary factors, rather than a deterioration in general price setting behavior. In fact, core inflation indicators in the last quarter point to an underlying inflation trend of around 4 to 5 percent."
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The story of “No” in Turkish-American relations
Güven Sak, PhD
17 August 2010
They say, every no is a blessing. Although the Prime Minister of Turkey has been walking around saying "yes" throughout the country, Turkey is recently famous around the world with its 'no's. Today's topic is the recent remoteness. Turkey - US relations are recently not as warm as toast. We used to have periods like this. Each of these periods had a unique remoteness. Today, let us take a look at the remoteness of the day. The source of the recent remoteness is closely related with two 'no's of today. I believe if we can successfully comprehend the difference between the two 'no's we can better assess the current process. Would you like to listen the story of the 'no's in Turkish-American relations?
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Rising input costs are of key importance for the exchange rate debates
Güven Sak, PhD
12 August 2010
It is like we are living in a global Hodja Nasreddin anecdote. We get amused for finding what we had lost. The world has been trying to compensate for the loss of the economic crisis that has completed the second year. Therefore, the matter at hand has a dual character. On the one hand, we are no longer at the bottom of the pitch as we were two years ago. However, we are yet not out of the pitch, either. We are in the middle. Meanwhile, some countries perform better than some others. For now, Turkey is not among the best-performers. We will continue questioning why. But first let me finish my undone business. Last week I was questioning why the exporters are not happy with the current value of lira. Today let me finish with this issue so that I can switch to the "what must be done" part. F
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Ensuring shift of axis
Fatih Özatay, PhD
12 August 2010
In politics we frequently hear the argument 'We follow from so-and-so.' They put this argument to pride on. But were those who are followed really successful? On which criteria will we measure success? Let me make things easier for you and limit ourselves with the field of economy. Still, it is hard to answer this question. Today's Turkey is considerably different than the Turkey in four or five decades ago. Of course the change was in a good direction. In that case, there is a success in being proud on 'following from someone'.
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“It is not that we became fake exporters although Turkey has a solid industrial policy”
Güven Sak, PhD
10 August 2010
Recovery in Turkey's economy since the end of the first wave of the 2008 crisis relies on domestic demand. The recovery in the export markets is relatively slower. Here, the prolonged crisis in the Europe and the resultant slowdown in European economy have a role in this. We should underline that the challenges facing Turkish exporters due to intensified competition also play a role. The fact that recovery is driven by domestic demand brought current account deficit issue to the fore once again. In the aftermaths of the crisis Turkey has been growing compared to the year before, let aside the previous periods. In the meanwhile, imports grow more rapidly than exports. Since exports cannot boost due to certain specific circumstances, the increase in imports grab more attention. What does thi
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So, how must we asses this exchange rate issue?
Güven Sak, PhD
05 August 2010
Things were not like this before. When domestic tension on political issues increased, exchange rate used to go out of control. It is different not. While the negotiations in the context of the Supreme Military Council continue, Turkish lira tends to appreciate quietly. As the Turkish lira appreciates, or remains constant in nominal terms, exports get disturbed. As exporters get disturbed, the responsible Minister now and then loses consciousness. Then things turn entertaining. So, how shat we assess this situation? Why does not Turkish lira depreciate despite intense negotiations taking place in the country? Why are exporters so upset about the irresponsiveness of the exchange rate to these 'political developments'? Why does everyone tend to get angry at the Central Bank nowadays? If you
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Missing out the phenomena
Fatih Özatay, PhD
05 August 2010
I started to write a series of commentaries on inflation targeting regime of Turkey. I mentioned some important points on Sunday and Monday. Today I will give a break and continue on Sunday from where I stopped.
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“Beware the middle income trap!”
Güven Sak, PhD
03 August 2010
Do you look up at the sky once in a while? If you do not, please start doing. Particularly in Ankara and Istanbul, you first notice huge airplanes on scheduled flights. You can rarely see private planes and helicopters. Thirty years ago, when I was a child, you could not see such a picture when you looked up. Even if you could see something, it would be military helicopters or war crafts. Nowadays it is enough to look out from your window to realize how Turkey has changed. This is the case particularly for my generation. However, the splendor of the progress made so far must not make us miss out the critical brink Turkey is at. Turkey is quite close to the middle income trap. We should protect the country from this middle income trap. The recent data from the export markets must be analyz
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