Anasayfa
tarafından scarface Ptsi Ekim 20, 2008 11:35 am
While Turkey is certain to share in the pain of tumbling markets and collapsing growth worldwide, the country is also uniquely positioned not just to ride out the storm but also to turn circumstances to its advantage.In a breakfast yesterday with newspaper editors and television executives, Finance Minister Kemal Unakıtan sought to explain and defend the government's cautious stance toward any radical measures akin to those taken in the United States and Europe. Reversing a familiar adage about the relationship between developed and developing economies, Unakıtan essentially argued that while rich economies would no doubt suffer pneumonia or worse, Turkey was looking at the economic equivalent of a cold.
“At a time when the world is rushing its fire brigades to put out a host of fires, it's easy to react with a reflex to mobilize your own fire brigades as well,” said Unakıtan in his exchange with journalists. “But it is also important that you don't begin pumping water where there is no fire.”
No increase in deposit guarantees:
The chat over cheese and olives at a Bosporus-side hotel was light on details and specifics but rich in a confidence rare among many – if not most – private sector leaders. Yes, the government would do more to enable cash-strapped small- and medium-sized businesses to access credit, he said. Interest rate subventions to private lenders supporting small business were likely to be unveiled in coming days, he added. But no, intervention in exchange rates, a hasty increase in deposit guarantees or pleading to the International Monetary Fund are not among his policy prescriptions.
As many industrialists criticize the government for reacting too slowly, the Istanbul bourse has melted – with its benchmark index down 35 percent since the start of September – and the lira has lost nearly 21 percent against the U.S. dollar in the same period, while some $6 billion in foreign currency has fled the banking system. Thus, Unakıtan's confidence will surely spark a new round of debate about the government's slow steps in a world where policymakers are scrambling.
He did, however, offer compelling arguments to bolster his view that Turkey's finances were fundamentally different from the highly leveraged economies of Europe and the United States. Unakıtan stuck to the prediction that Turkish growth this year would come in the neighborhood of 4 percent and not drop precipitously next year. That view contrasts with most private forecasts anticipating domestic growth of 3 percent this year and no more than 1.7 percent in 2009.
Veiled warning to business:
Unakıtan also laced his two-hour chat with polite but repeatedly firm admonitions to business leaders to desist from a series of recent calls for the government to do more, including the recent call from the chief industrialists' lobby TÜSİAD to accelerate closure of a new financial deal with the IMF. Unakıtan said he would do nothing of the kind, that a premature renewal of any deal or “stand-by” agreement with the IMF could do more harm than good by tying the hands of the economy's managers. Business leaders' criticism of the government was irresponsible, he insisted, a refrain echoing repeated complaints made about the media and others by Prime Minister Recep Tayyip Erdoğan.
“Those in positions of responsibility should temper their remarks and speak appropriately,” he said, “for we are all in the same boat.”
Defending the reign of the ruling Justice and Development Party, or AKP, and his own six years as finance chief, Unakıtan said the most important work to protect Turkey's economy had already been done. While Turkey has debts, including yawning trade and current account deficits, its key balances are all within the 3 percent of GDP, or the so-called “Maastricht Criteria.”
Unakıtan said the government's “diversity policy” of developing trade relationships outside the traditional markets of Europe was paying dividends. Until recently, the EU accounted for some 60 percent of Turkish foreign trade. This year the figure has diminished to less than 50 percent, as Turkey has opened out new markets in Russia, Central Asia, the Persian Gulf and even Africa.
“Just go to Africa: You'll find Turkish entrepreneurs there,” he said, adding that fast-developing ties with energy-rich neighbors were just one of the bright spots that should not be ignored in any discussion of economic direction.
He also challenged the logic behind certain assumptions about the weakness of the economy, including the fact that Turkey's private sector had medium- and long-term debts in excess of $140 billion. While he offered no specific analysis, Unakıtan said those numbers included the debt financing embedded in many direct foreign investments in Turkey. More accurate accounting would reflect that debt as belonging to elsewhere than the Turkish private sector, a scorekeeping improvement he would like to make soon.
Don't ask, don't tell:
Unakıtan declined to make any predictions about the success of his call last week for Turkish citizens holding assets abroad to send them to Turkey without fearing questions or taxes. He did, however, respond to criticism that the “don't-ask-don't-tell” policy was an invitation to money launderers. “We will take all necessary steps to ensure we are not bringing in money from drug traffickers, arms dealers or smugglers,” he said.
He also focused on the much-quoted statistic that Turkey's export figures reflected a dangerously high percentage of temporarily imported “intermediate goods,” such as the higher value components in televisions. “The issue is not that we cannot make those (intermediate) goods, it is that we don't make those” because of labor costs, he said. The recent depreciation of the lira, coupled with recent and pending tax reductions on employment would make Turkish labor the most internationally competitive, he argued.
That said, the need for continued external financing and low domestic savings rates do mean that Turkey must continue to draw foreign investment. That investment would come, he predicted, as Turkey's geography and other factors would continue to make the country an appealing destination. Chief among the factors making Turkey attractive, he emphasized, was continuing economic stability driven by a strong policy of fiscal and financial discipline.
The relative strength of Turkey's private sector will only grow as U.S. and European firms find themselves in trouble. Again without offering specifics, he predicted the coming weeks would see internationally eye-catching deals as Turkish firms acquire international brands akin to last year's purchase by the Ülker food group of Godiva, the iconic Belgian chocolate maker. He also predicted a host of new deals in the agriculture sector involving Saudi and other investors.
“There are new markets out there and I expect attacks [by Turkish investors],” he said. “And we will be offering them all of our support. For new investment, we will continue to make Turkey a safe harbor in the world.”
No increase in deposit guarantees:
The chat over cheese and olives at a Bosporus-side hotel was light on details and specifics but rich in a confidence rare among many – if not most – private sector leaders. Yes, the government would do more to enable cash-strapped small- and medium-sized businesses to access credit, he said. Interest rate subventions to private lenders supporting small business were likely to be unveiled in coming days, he added. But no, intervention in exchange rates, a hasty increase in deposit guarantees or pleading to the International Monetary Fund are not among his policy prescriptions.
As many industrialists criticize the government for reacting too slowly, the Istanbul bourse has melted – with its benchmark index down 35 percent since the start of September – and the lira has lost nearly 21 percent against the U.S. dollar in the same period, while some $6 billion in foreign currency has fled the banking system. Thus, Unakıtan's confidence will surely spark a new round of debate about the government's slow steps in a world where policymakers are scrambling.
He did, however, offer compelling arguments to bolster his view that Turkey's finances were fundamentally different from the highly leveraged economies of Europe and the United States. Unakıtan stuck to the prediction that Turkish growth this year would come in the neighborhood of 4 percent and not drop precipitously next year. That view contrasts with most private forecasts anticipating domestic growth of 3 percent this year and no more than 1.7 percent in 2009.
Veiled warning to business:
Unakıtan also laced his two-hour chat with polite but repeatedly firm admonitions to business leaders to desist from a series of recent calls for the government to do more, including the recent call from the chief industrialists' lobby TÜSİAD to accelerate closure of a new financial deal with the IMF. Unakıtan said he would do nothing of the kind, that a premature renewal of any deal or “stand-by” agreement with the IMF could do more harm than good by tying the hands of the economy's managers. Business leaders' criticism of the government was irresponsible, he insisted, a refrain echoing repeated complaints made about the media and others by Prime Minister Recep Tayyip Erdoğan.
“Those in positions of responsibility should temper their remarks and speak appropriately,” he said, “for we are all in the same boat.”
Defending the reign of the ruling Justice and Development Party, or AKP, and his own six years as finance chief, Unakıtan said the most important work to protect Turkey's economy had already been done. While Turkey has debts, including yawning trade and current account deficits, its key balances are all within the 3 percent of GDP, or the so-called “Maastricht Criteria.”
Unakıtan said the government's “diversity policy” of developing trade relationships outside the traditional markets of Europe was paying dividends. Until recently, the EU accounted for some 60 percent of Turkish foreign trade. This year the figure has diminished to less than 50 percent, as Turkey has opened out new markets in Russia, Central Asia, the Persian Gulf and even Africa.
“Just go to Africa: You'll find Turkish entrepreneurs there,” he said, adding that fast-developing ties with energy-rich neighbors were just one of the bright spots that should not be ignored in any discussion of economic direction.
He also challenged the logic behind certain assumptions about the weakness of the economy, including the fact that Turkey's private sector had medium- and long-term debts in excess of $140 billion. While he offered no specific analysis, Unakıtan said those numbers included the debt financing embedded in many direct foreign investments in Turkey. More accurate accounting would reflect that debt as belonging to elsewhere than the Turkish private sector, a scorekeeping improvement he would like to make soon.
Don't ask, don't tell:
Unakıtan declined to make any predictions about the success of his call last week for Turkish citizens holding assets abroad to send them to Turkey without fearing questions or taxes. He did, however, respond to criticism that the “don't-ask-don't-tell” policy was an invitation to money launderers. “We will take all necessary steps to ensure we are not bringing in money from drug traffickers, arms dealers or smugglers,” he said.
He also focused on the much-quoted statistic that Turkey's export figures reflected a dangerously high percentage of temporarily imported “intermediate goods,” such as the higher value components in televisions. “The issue is not that we cannot make those (intermediate) goods, it is that we don't make those” because of labor costs, he said. The recent depreciation of the lira, coupled with recent and pending tax reductions on employment would make Turkish labor the most internationally competitive, he argued.
That said, the need for continued external financing and low domestic savings rates do mean that Turkey must continue to draw foreign investment. That investment would come, he predicted, as Turkey's geography and other factors would continue to make the country an appealing destination. Chief among the factors making Turkey attractive, he emphasized, was continuing economic stability driven by a strong policy of fiscal and financial discipline.
The relative strength of Turkey's private sector will only grow as U.S. and European firms find themselves in trouble. Again without offering specifics, he predicted the coming weeks would see internationally eye-catching deals as Turkish firms acquire international brands akin to last year's purchase by the Ülker food group of Godiva, the iconic Belgian chocolate maker. He also predicted a host of new deals in the agriculture sector involving Saudi and other investors.
“There are new markets out there and I expect attacks [by Turkish investors],” he said. “And we will be offering them all of our support. For new investment, we will continue to make Turkey a safe harbor in the world.”
