Many EU countries struggle with public budget deficits and public debt whereas Turkey does not have significant problems in this respect.

In the market economy of the East, surveys on consumer and investor confidence are conducted and the results are used to generate indices. There is an important motivation for this: there exists a significant correlation between the consumption the private sector is planning to make and the confidence in the economy. Even if your income remains constant, interest rate does not change, prices do not move or your wealth does not improve, you might still increase consumption if you are hopeful about the future. On the contrary, if you believe that things are worsening, you might prefer to save some money out of fear.

But it is also true that it is not always easy to acknowledge and explain why the consumer or investor confidence - or the confidence in the economy in more general terms - increases or decreases. You can in some cases come up with concrete causes: an economic program which wins the confidence of everyone or a new program that would improve the pace of sustainable development was announced, raising hopes and excitement. 

Rise in confidence is normal
Under these circumstances it is normal and expectable that the confidence in the economy rises. Also it is natural that this change has a repercussion on domestic demand. Therefore, we would expect that the pace of growth would be higher compared to the case where no such stimulus effect exists.

But in some other cases, it could be difficult to estimate why the confidence in the economy improved. It might be just because the perceptions imply 'so'. Even if you as an economist acknowledge that the current state of affairs is not much different than the recent past, many might 'somehow' believe that it is different.

Since Keynes, we have been aware that passions, judgments and perceptions have an important role in determining individuals' behaviors. It is not always possible to explain any behavior with a 'concrete' justification. In this context, it becomes more difficult - at least for me - to estimate growth in 2011. When I think this through, I think that 2011 is no different than 2007 in terms of economic policy decisions, for instance. The current economic policy essentially seeks to maintain stability. However, it is seen that the economic program says nothing beyond the universal discourse on an attempt to change the status quo as well as maintaining stability.

From this perspective, it appears that there is no concrete reason to make growth rate in 2011 to be higher than the habitual rate of growth (4.5 percent in average). But this is my perception only; and in the context of the above discussion it is of higher importance what the others perceive. 

Public accounts are not problematic
I am obsessed with this issue because of the perception that Turkey 'shines like a star' which is triggered by some objective justifications: Turkey's financial system remained sound whereas those of developed countries collapsed. Many EU countries struggle with public budget deficits and public debt whereas Turkey does not have significant problems in this respect. I have argued several times in my commentaries that despite the justifications, I do not think Turkey 'shines like a star' despite how much I would like that. Unemployment rate is still way higher than the pre-crisis level. Figures on industrial production for November reveal that production also failed to re-gain the pre-crisis level. Although fiscal discipline is ensured, the quality of it is questionable. And given that the question 'where are the resources to finance it' raise the question 'do you really think we are lacking resources', I am also concerned that there is a risk that Turkey would never initiate a breakthrough program. But as I said before, when estimating future growth, it is of higher importance what others perceive the circumstances.

Note: I will be writing also on Saturdays; again 'for now'.

This commentary was published in Radikal daily on 13.01.2011