As I have always said, “First thing we should do is to fix the perception of Turkey”. 40% of the problems we are going through right now are mainly caused by economic reasons, and the remaining 60% is all about politics. When I say politics, I do not just mean foreign policies. I am also taking about the expectation management.
According to those who think and act wisely, Turkey should first mend ties with the West. This would be the first step in helping fix the rest. As for the Economy Administration, it is expected to be realistic. Government’s recently launched YEP program (New Economic Program) shows that the economy administration adopts a realistic approach to Turkey’s current situation in terms of achieving economic targets.
As Government tries to bring especially public expenditure under control, I must say that we can expect a close monitoring of public revenues as well. However, the Government has not managed to offer a financial anchor yet while it continues to provide efficient supervision and operation of public finance. It is also a quite positive development that there is $60 billion savings target among the public finance goals. Another realistic target of the program involves unemployment rates. Apparently, the Government has finally come to the terms with the fact that unemployment rate will not fall below 10 percent. Therefore, I think we can consider the program quite realistic, seeking reasonable solutions to problems.
As far as I can see, this time the Administration has moderate GDP targets, realistic inflation/unemployment forecast and a hopeful approach to current account deficit.
“Two key mistakes!”
But, two key mistakes were made and they now require urgent fixing.
First, when we compare TRY and USD GNP forecasts posted on the Ministry of Finance and Treasury’s website, it can be seen that Dollar/TL is set to 4.90 for 2018, 5.60 for 2019’da, 6.00 for 2020 and 6.20 for 2021. But, haven’t we achieved these targets already? These targets need urgent revision!
On the other, I do not think it is wise of the Government to keep primary surplus targets quite low for 2018-2021, especially when we know that it was the Economy Administration who has set public savings goals in the first place. If the YEP is expected to bring efficient solutions, then the FED figures need to be increased.