Actually, no one really listens to anyone else. That’s because maybe we are stubborn or we find it hard to trust people… Back in the day, we used to use neighbours as messengers to relay our messages to our families. This method no longer seems to be working.
A very enthusiastic visitor to Turkey and Istanbul, Nouriel Roubini made an important statement the other day. Previously served as a senior adviser to the White House council of economic advisers, Roubini said that Turkish economy will continue to improve.
This statement of Roubini actually is of utmost importance as he is normally a big fan of disaster scenarios, and he did not make very promising comments about the rest of the world economy either. However, neither Roubini nor international financial institutions think that, in 2020, Turkey will achieve a 5 percent GDP growth rate. Expressing that they are expecting a minimum 2 percent and a maximum of 3 percent GDP rate, they emphasize that external conjuncture may significantly affect exchange rates and that Turkish economic is still fragile due to structurality in current accounts deficit.
Indicating that Turkey is not expected to face a recession soon, Roubini said, “No more cheap money!” and added that strong measures monetary measures should be taken. I do agree with Roubini because it’s no longer possible to sustain economies with the 1990s methods. We absolutely need a brand new approach to help us eliminate the need for borrowing and higher taxation due to public sector growth.
The fact that post-financial crises expansion efforts lasted longer than they used to and that the public sector keeps growing so as to sustain this expansion causes the governments around the world to face liquidity squeeze. This whole situation makes it harder for financial policy makers to show the same flexibility as the makers of monetary policies. Similarly in Turkey, the Ministry of Finance and Treasury almost solely focuses on payment circulation and makes every effort to raise tax revenue.
“Mr. Disaster gives tips on how to escape from disaster…”
Although I do not agree with Roubini on everything, I support his suggestions about monetary policies as I notice that the share of interest payments in public expenditure has been rapidly increasing all around the world despite recent rate cuts. Actually, Roubini sounds like a doctor who tells us not to eat cake if we want to get healthier. What we need is a doctor that is capable of stopping us from eating that cake! Because it seems almost impossible for the government to make it happen by their own efforts.
Here’s the most interesting part: “First, start with structural reforms” Roubini said. I’m sure those who didn’t listen to me when I said the exact same thing will definitely listen to Roubini now.
By the way, Roubini said something about the cryptocurrencies as well. “There is unbalance pricing” he said. Although he shared the most obvious thing, I do agree with him that cryptocurrency must be regulated.
Roubini has shortly said that even though Turkish economy shows signs of improvement and seems like it will achieve a relatively modest GDP rate, however its fragility is still not fully mended. He also has also tried to ease tensions about Brexit and Trade Wars, which indeed seemed interesting to me as it’s not like him to have a general positive attitude towards global matters.
