Industrial Production and 0% GDP growth

I’ve been objecting to international institutions’ 2.5% negative GDP growth prediction since the New Year. I have emphasized too many times that we should expect a GDP growth around %0.

“Olaylarla Türkiye Ekonomisi” co-authored with focuses on the critical milestones of Turkish Economy since the 1920s. The book allows you to observe that everything in fact remains unchanged despite economy seems to have changed shell in every era. It helps you remember Turkish People’s fast adaptability to the good and the bad. In other words, they can accept the circumstances, whatever they may be, and act accordingly. There must be only a few environments in other places of the world like Turkish business world, which is capable of developing too many strategies just to survive financial bottlenecks.

Here’s an example for you: Company A gives company B a cheque. Then, Company B endorses this cheque over to the Company C. The company signs this cheque over to the Company D before the maturity of the cheque. But, when the Company D realizes that the cheque has bounced, it calls Company C but there is no one answering the phone. At this moment, our clever business person decides to call directly Company A because their financial future is hanging by a thread now. If one of these companies goes bankrupt, the others will follow too, just like a domino effect.

On the other hand, Company A knows perfectly well that this was a dud cheque. That is why it tells the rep of the Company D to return that cheque to him and that instead he would give Company D one of the cheques given by the customers. In this way, Company A extends the time to make payment for a couple of more months, which also serves Company B and C well while Company D has a new post-dated cheque that can be signed over to another creditor. Isn’t just awfully interesting? This kind of payment chain is almost unique to Turkey.

“Fun but not useful…”

As a matter of fact, debt collectors are prohibited from processing a check before the date on the check however Turkish lawmakers had to make it legitimate because of these practices in Turkey. If you’re a debt collector, you cannot cash a check before the date printed on the front of it. There are also many other types of payments methods in Turkish business environment, such as barter, swap etc. But I won’t attempt at explaining each of these methods here. Only the weakest or the most lavish goes bankrupt.

Nevertheless, Turkish business worlds know how to gather strength back one way or the other. Although this system helps the wheels of payment mechanism continue to function, it doesn’t really serves Turkish economy’s purpose, because, companies having difficulties in payment usually tend to fail in creating added-value. This system that enables unproductive companies to live does not help creating development even though it boosts GDP growth.

It would just be unrealistic to expect Turkey to achieve extraordinary things under such dynamics. Neither employment incentives nor decline in credit interest rates will help Turkish companies achieve success. Turkish economy will never be able to get to the safe zone unless the current economic model is replaced with a better and more functional one.

As I’ve been presenting, since the beginning of the New Year, an entirely different perspective than the pessimists by predicting that Turkish economy would grow around 0%, I kindly ask you not to consider this article as the reflection of negative thoughts.