Unemployment data released yesterday didn’t surprise me at all. With our current growth model, it appears like we could achieve a stable single-digit unemployment rate only in 2023.
But, there is an increasing deterioration in the relationship between some fundamental parameters. Only time will tell whether it is only conjunctural or will it be permanent.
First, let’s take a quick look at the energy-GDP growth relationship: It was a common approach to believe there is a correlation between the electricity and electric energy consumption. However, today the GDP growth and the growing increase in the electric energy consumption are considered not to be correlated at all. According to latest statistics, the correlation between the GDP growth and electric energy consumption in Turkey has ruptured since 2019, which means entities seem to have succeeded in achieving the same efficiency level while consuming less energy. Obviously, this situation will require us economists to take a different perspective when making economic analyses.
Another fact is the relationship between automotive manufacturing, industrial production and GDP growth in Turkey. These three factors which were thought to be connected to each other-yet we were not sure about any correlation between the three of them-have been recently analysed. According to the result, there is a strong correlation between the GDP growth and automotive industry, except for the period of 2011-20133 and the period of 2015-2016 where Turkish economy was sustained almost only by the construction industry. The result also shows that loan repayment incentives for domestic cars offered by public banks were a spot-on decision indeed.
“I wonder whether the economists who trivialised important warnings already regret it.”
“No need to worry as long as the current account deficit is financed” was the popular motto in the early 2000s, even frequently used by some experienced economists and professors despite the conditions that led to 2001 financial crises. They even used their popularity to fight off, to trivialise criticism about the growing current account deficit after the 2001 crisis. At this point, we still try to reduce current account deficit through “net errors and omissions”. That is to say, the ‘structurality’ problem hasn’t been dealt with yet. Now, we give the impression that we are setting a bad example for other countries as well.
The fact that the rise in “net errors and omissions” residual category, which plays a great role in reducing current account deficit, does bother other countries as well has been indicated in a recent analysis by OECD. Colombian, Chilean and South African governments are been subjected to heavy criticism about the sharp increase in net errors and omissions. The pace of foreign capital movements is so high in those countries that they can no longer be ignored. This situation also indicates that there is a certain decline in fixed capital investments vis-à-vis an increase in short-term capital movements. There is also the “unidentified movements of funds”. Net errors and omissions mostly consist of these unidentified movements of funds.
Now, let’s discuss the fact that Boris Johnson’s Conservative Party wins UK election. According to a general election post-vote poll, Conservatives were ahead among those aged 45-54 (with 43%), 55-64 (with 49%) and 65+ (with 62%). On the other hand, Labour won more than half the vote among those turning out aged 18-24 (67%) and 25-34 (50%). Considering UK is facing a population crisis with birth rates at an all-time low, Conservatives should thank the younger populations for low turnout, thus making PM Johnson’s Party win the election. Well, most of the Conservative voters will soon cease to exist yet they have come to vote to decide the future. Tragicomically sad but true…