We have been going through some hard times recently. This weekend, I had the chance to take a look back on the history of Turkish Republic. To be honest, the conditions we are currently living in are the most difficult conditions by far that Turkey had to go through throughout its history. Even during the Cyprus Peace Operation, we hadn’t had so much difficulty.
As I look back it seems like only yesterday. Everyone had been covering their windows with crepe paper for fear of being attacked by Greek fighter jets. You know, to prevent the sunlight from coming in through the windows. That year the world was experiencing its very first ‘oil’ crisis. The American Embargo had actually begun before the operation. As a result of ill-intentioned criticism by the US media about the cultivation of the opium poppy in Turkey, the then-US President Gerald Ford had started the first economic sanctions against Turkey, and in 1975, the United States Congress had decided to place an embargo on bilateral trade flows. I was 6 or 7 years old back then. Turkey was a country where you wouldn’t find anything to buy even if your pocket was full of money. Nevertheless, even during those years, Turkey wasn’t feeling like it was forced into a difficult situation that it cannot easily resolve as it is now.
Today, there are plenty of things to buy people don’t have enough money to buy them. The Eastern Mediterranean, Libya and Syria are literally burning. Our relationship with the US doesn’t exactly improve while Turkey-Russia ties are weakening by the minute, not to mention our diplomatic relations with the EU are hanging by a thread. Just as the economy was starting to improve, Turkey was suddenly struck by diplomatic crises and Coronavirus fears. As I have mentioned last week, if the virus spreads further, we will have to revise Turkey’s growth expectations backwards.
I was in Belgrade yesterday as the only economist invited to the 82nd meeting of IREPAS (International Rebar Exporters and Producers Association) to talk about the global economic conjuncture of today. It just makes me so proud to be given the chance to represent Altınbaş University in such international occasions. During the meeting, I tried to provide the participants with my insights into the possible impacts of the coronavirus and Brexit. As Turkey is mourning after the death of its brave soldiers, I really didn’t feel like I should talk about the GDP growth data which was released last week.
“Economic growth and inflation….”
Speaking of growth, when we take a closer look at the GDP growth numbers released last Friday, we can see a certain decline in fixed capital formation, not to mention exports’ contribution to GDP remains way below when compared to imports performance. Although Turkey has achieved a significant increase in its GDP in the last quarter, we in fact need to achieve a larger GDP at least for a couple of more quarters just like we did in the last quarter of 2019, in order to attain full recovery.
By the way, the February 29 deadline set by Turkey for Syrian troops to pull back to the Sochi-delineated positions ran out three days ago. Now, we’ll have to wait and see what happens. Turkey will have to be extra careful now bearing in mind that conflicts may get even more intense, and expecting a counter attack from Russians forces and unexpected moves from the US and EU.
Turkey’s inflation rates are scheduled to be released this morning. I had the chance to take a look at the figures by Istanbul Chamber of Commerce and they don’t seem very good. Although prices in Istanbul seem like they have soothed down in January, they once again climbed above 1% the very next month. As CPI and Istanbul Chamber of Commerce indices do not show separate trends, any consumer inflation figure between 0.7% and 1.0% won’t help us achieve the highly anticipated single digit inflation. If CPI figures turn out to be drastically different than the Chamber of Commerce figures, this would definitely cause some eyebrows to raise.