I hope the final results of local elections will bring good fortune and positive vibes to our country. As one of its first outcomes, we can already notice positive trends in markets.
Industrial data released on Tuesday indeed brought us some hope. We can observe the first signs of improvement. But as the negative trend in year-on-year basis continues, I must say that GDP growth rate won’t be affected positively by this mild recovery.
The fact that Turkish economic recovery did not have any break for the last two month is a positive sign. Therefore, I’d like to point out once again what I’ve been expressing ay the seminars, conferences or in my morning reports: If first quarter growth data does not turn out to be as negative as it is expected, 2019 GDP growth rate may hit a level around 0-0.5% . Thanks to the sharp fall in the first quarter of last year, positive GDP growth in this year’s last quarter is guaranteed. And now with TurkStat’s revision of the previous year’s data, I think Turkey might be able to avoid a 2.5% recession as forecasted by the IMF.
If Turkey can manage to present a new plan and a narrative which are good enough to convince enough both the world and the investors, Turkish economy might recover faster than expected. I need to point out again that we should stick to the Democracy and Market Rules.
In order for Turkish Economy can show significant improvement, Turkey will need to be prescribed with smart solutions designed in a manner which is capable of taking into account the current global issues. The most convenient source for investments is private savings but Turkey’s current resources are not very abundant indeed. If we need Foreign Funds, we have to be convincing.
“We must tell the right narrative in the right way…”
If the US-EU-China trio’s economies start suffering problems, each and every plan we devised as “national program” will become void; because EU is one of our top trading partners, global capital is quite sensitive about any tiny event or incident in the United States; and China sustains many economies with its production capability and tech solutions. If anything bad happens in one of these countries, economy-wise, it will probably take a lot longer for Turkey to achieve economic recover.
Other than that, Turkey currently has no national monetary policies implemented. If we hike rates, foreign funds will enter the country but eventually causing the monetary base to expand and us to lose control. If we opt to lower rates, funds will go running off to other countries, causing monetary base to shrink and growth to slow down. We all know what we should do: getting our priorities straight.
If our priority is to find funds, then we should show to the world that we are eager to do the right thing, without poking the rates too much. The only way that to prove our determination would be to achieve executive, legislative and judicial independence.
We must make investors feel confident that they will not face situations which are treated differently under similar or same circumstances. They should not suffer the challenges of an ever-changing set of regulations. Rationalism must dominate every aspect of economy, from incentives to the foreign trade regime. They must not be forced to deal with public agencies that reply to the requests when they wish to do so. I still have faith that one day Turkey will achieve all of this.