This ‘economy’ is not easy to understand from computer screen…

I feel like I need to take a closer look around me, at what’s been going on lately especially when I’m literally caught between the “naysayers” the “optimists”. A couple of day ago, I had chance to really understand the state Turkey is currently in. Here’s the story:

I was finally able to stay in Istanbul for the weekend after a very long time, no conference no nothing… First stop was a dinner at a downtown 5-star hotel on Friday night where we were joined by some foreign guests. My impression of the restaurant is, it wasn’t enough crowded for Friday night, and the food was not as it was used to be. There was a general sloppiness in the way the restaurant was run. Then an idea occurred to me. But I had to wait 24 hours before I announce it to everyone.

Saturday afternoon, I was on a discovery trip to find out whether my newly published book are available for sale in mall bookstores and while I was at it I chitchatted with the café and restaurant staff around. They told me that things were not going so well businesswise. When the prices went up, the number of customers has started to decrease proportionally with the average spend per customer in restaurants.

When the night came, I rushed into this non-pretentious restaurant in Karaköy with a group of friends. Of course, how could we end the night without talking Turkish economy? I couldn’t help but notice that the cafés and the restaurants in the district were jam packed. From this famous place serving mostly haricot beans to Turkish café hubs, each and every place was incredibly crowded. So, I turned to my friends and said, “Do you want to find out the current situation of economy in Turkey? Follow me!”

First, we took the historic subway to get to Tünel Square. We walked from Istiklal Street to Sıraselviler and Cihangir. People were everywhere. Taksim was bulging at the seams. Almost all of the cafés and restaurants were overly crowded. From those ‘wet burger’ places in Taksim Square to terrace cafés in backstreets, people of different age groups were waiting in lines to get a seat.

Our discovery trip continued with a taxi stroll through Nişantaşı. Traffic was left paralyzed for hours because of the “youth concert” at Maçka Küçükçiftlik Park. Buses coming from all over Turkey were parked on pavements. I asked the teenagers around where they were coming from. “Beylikdüzü, Fatih, Esenler, Gaziosmanpaşa, Sultanbeyli, Sarıyer and Ataşehir” they replied; not to mention people coming from cities near Istanbul such as Kocaeli, Sakarya and Edirne.

“What’s happening?”

Nişantaşı was overly crowded as if it was trying to “financial crisis talks” prove wrong. It was literally bulging at the seams. These people enjoying a couple of drinks, fine meals at cafés and restaurants mostly are between 18 and 40 years of age. I talked to a waiter in Nişantaşı’s famous Atiye Street. He told me that the average spend per customer varies between TRY 50 and TRY 150, by credit card or cash.

Our group, curious to find out the economic situation on streets of Istanbul, involved tourism professionals as well, who informed that people were still showing great interest in winter holidays, just like they did in previous years. “We have places abroad that are already booked for winter”, they said. As I know that they are always straight with me, the idea that occurred to me the other night got more and more enhanced. Surrounded by loud conversations and traffic noise, we kept walking.

We got to a small-medium scale mall. Stores weren’t closed yet. We went through a shoes & bags store to take a look at the prices. Staff said that there is an item-based decline even though their revenue stays the same. Almost all stores in the mall, even some restaurant, are part of this instant 10% discount campaign. However, they are all complaining about costs. It looks like discounts will not enough alone to keep customers coming back. Some sort of regulation is also needed to take costs under control.

The night finally ended and all my friends went back to their homes, satisfied with the answers they got.

Here’s my analysis of the night: In times of hardship, first high income families, and then low income families start reducing their expenses. However, it takes a certain amount of time for Middle-class families to develop the reflex for cutting expenses. As far as I can understand, 18-40 aged middle class people have not yet been affected by financial bottleneck, if any; which means there is a low probability that we will face a “sudden economic slowdown” due to real sector problems, at least until the local elections. Food-Beverage Sector and Shoes-Bags Segments are strongly indicative of economic vibrancy.

According to what I hear, Government may be preparing for making new arrangements in Special Consumption Tax or VAT on Home Appliances, or increasing Customs Duties, taking advantage of the abovementioned vibrancy, which, I think, is not a very bright idea. “Economy looks vibrant… People are spending money… Let’s recover those unpaid taxes!” This is the type of thinking that the Government should avoid at all costs. Otherwise, you would be making a big mistake. Just saying…