Who you are is more important than where you stand in the new world
Güven Sak, PhD
19 July 2013
What does the word supermarket bring to mind? Countless racks, packaged food, rows of cashiers, right? Not anymore. The supermarket I shopped at the other day in London had self-checkout machines instead of checkout staff. Customers scanned the barcodes of items by the checkout machine themselves and paid the sum via credit card. No cash, no attendants except two people in charge of about 15 checkout machines. One of them was responsible only for detecting the problem and consulting about it with the second attendant when he or she could not solve it alone. It was quite easy to help out first-timers like myself. Harder tasks required the second attendant to step up. Later I found out that the self-checkout system has recently started in some markets in Turkey as well. We are marching towar
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That is what independence is for
Fatih Özatay, PhD
18 July 2013
For the sake of the country it is critical to construct the monetary policy on an exclusively “technical” framework and avoid comments which in some cases press the Bank. In periods where significant upswings in exchange rate are observed in Turkey, a diverse array of questions and comments get to be heard. Why does the Central Bank (CBT) sell foreign exchange (FX) at low price? To whom it sells the FX? Why does it deplete its FX reserves so rapidly? When the CBT is supposed to use its reserves if not in times like today? And the list can be extended. The CBT is as often recommended about interest rate decisions. And assume that apart from these, the government “requests” the CBT not to use or refrain from using certain policy tools.
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Why Austria is different?
Güven Sak, PhD
16 July 2013
Austria’s advantage lies in its vocational education system. For education it is vital to listen to local needs. Turkey is moving at a pace slower than what we are used to in terms of growth. And it appears that this will remain the case for some time more. We all know what happens in such episodes: the unemployment rate starts to increase. When this happens, it is important to give the priority to youth employment. Europe has done this in the last five years. But this has not been the case in Austria. Austria is different. After examining their case, I started to think that it is time to change the image and the content of our vocational training system. I believe vocational education needs rebranding. Let me tell you why and how.
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Financial problems: temporary or permanent? (2)
Fatih Özatay, PhD
16 July 2013
The Central Bank of Turkey should increase its policy rate. The market rate already reached 9 percent. Last time I raised a question and left it to you to answer. Now it’s my turn. The question was whether the current problems in the financial markets are temporary or permanent. By first I want to correct a mistake in the last paragraph. Though the general framework of the commentary tells it, the mistake might harm the coherence of the story. So, below is the corrected version of the conclusion of the previous commentary: “In conclusion the FED will 1) first cease additional injections 2) initiate withdrawals 3) increase federal bond rate 4) accelerate the withdrawal process 5) revise the plan under the light of new information.
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Financial problems: temporary or permanent?
Fatih Özatay, PhD
13 July 2013
The FED will first cease additional injections, than initiate withdrawals, and increase federal bond rate. Question: What do you think about the current problems in the financial markets? Are they temporary or permanent? This question is of critical importance for the economic policy response that should be given. They require different responses. I would ponder on this question especially if I were in the shoes of central bankers of Turkey. Of course posing the question alone does not fulfill my duty. I am sure everyone there are aware, but I would like to summarize some important points. After all, a friend in need is a friend indeed.
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How do business owners get richer while their companies fail to flourish?
Güven Sak, PhD
12 July 2013
How can business owners become richer while their companies fail to flourish? Have you checked the Fortune Global 500 and the World’s Billionaires by Forbes? I take a look at the rankings every now and then. The former gives the ranking of the 500 largest corporations in the world by revenue and the latter gives the net worth of the world’s billionaires. The first is based on companies, the second on persons. For years, Koç Holding has been the only company from Turkey on the Global 500 list. Meanwhile, the number of Forbes billionaires from Turkey has been increasing each year. The 2013 lists were recently released. Turkey still trails behind in the Fortune Global 500 while the number of billionaires in the Forbes list has reached 43. Compared to America’s 132, that's not bad at all. Thi
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A challenging period concerning inflation
Fatih Özatay, PhD
11 July 2013
The CPI has not converged with the headline inflation unlike what is normally expected. Headline inflation has long ago lost its function as a “headline” indicator. The period ahead will be challenging for Turkey concerning not only growth but also inflation. The initiation of the monetary tightening process in the US puts an upwards pressure on the currencies of emerging market economies including Turkey. It appears that this pressure will be here with us for quite a long period. This does not mean that it will be a permanent challenge, though. The exchange rate might have ups and downs and fluctuations occasionally. Given the volume of the quantitative easing operation the FED has carried out since the beginning of the global crisis, however, the main exchange rate trend will be upwards.
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Turkey needs a positive agenda
Güven Sak, PhD
09 July 2013
Turkey may never make the leap to the high-income group of countries if it cannot play its hand correctly while a new world order is taking shape. The other day IMF managing director Lagarde said that the IMF might revise down the global growth estimations for 2013. Explaining the grounds for the revision, Lagarde particularly emphasized that 2013 growth might be lower than expected in emerging market economies, not for developing or low-income countries. This is new, specific to 2013. Everyone is wondering how the Chinese economy will slow down. This new situation inevitably will affect Turkey. What happened when the chairman of the Federal Reserve System of the US stated the obvious and said, “we cannot keep on purchasing bonds forever. There is an end to this and it is not that far away
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Growth: below the average in the next few years?
Fatih Özatay, PhD
09 July 2013
Uncertainty is the nemesis of the confidence in an economy. It is not realistic to expect a rapid economic recovery in this environment. Yesterday industrial output figures for May were released. Here are some numbers: in the first five months of 2013 industrial output grew year-on-year by 2.1 percent. This is lower compared to 3.3 in the first five months of 2012. The picture becomes a bit brighter if we make the analysis over a shorter timeframe. In April and May, industrial output increased year-on-year by 3.3 percent, which is 2 percentage-points higher compared to the rate in the first quarter of 2013. In May alone, output growth was 2 percent, but we should not pay attention to this since observations based on a single month are likely to be unstable.
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Overpraising (3)
Fatih Özatay, PhD
06 July 2013
In the 2003-2012 period, GDP of emerging market economies on average grew by 1.95 times, compared to Turkey’s 1.43. What a repulsive scene: a general out front. A few more sitting behind him, accompanied by religious authorities and come civilians. Purportedly, they have saved the country. People celebrating at squares. Egypt is on world’s radar nowadays. On March 12th, I wrote an underwhelming piece on the Egyptian economy and I have nothing more to offer. The best I can do is to return to the “overpraising” series on Turkey. So far I have focused on the “over” part of the deal and will do the same today. As you might remember I was obsessed about the per capita income developments.
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