Two sides of the economy coin
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Oluşturulma Tarihi: Temmuz 10, 2009 00:00
The Turkish economy continues to send signals that a return to the good old days has started, but this should not be a cause for policymakers to slacken off. Instead, the healing atmosphere should be turned into an opportunity to improve conditions.
According to official figures released Wednesday, Turkish industrial output rose 5.03 percent in May on a month-on-monthly basis. The other side of the coin, however, is darker, with industrial output falling 17.4 percent compared to the same month of last year.
Exports fell 41 percent to $7.4 billion in May from a year earlier, the statistics agency in Ankara said on June 30. Imports were down 44 percent to $10.8 billion. Manufacturing output dropped an annual 19 percent in May. Mining declined 13 percent and utilities such as power producers fell 5.5 percent, the data showed.
The figures also reveal sharp interest rate cuts and measures taken by the government to help to reduce the impacts of the global financial crisis, though not to the extent that was hoped. The Central Bank has cut its benchmark interest rate by 8 percentage points in as many months, taking it to a record low of 8.75 percent, to boost consumer spending and investment. Central Bank Governor Durmu? Yõlmaz said on June 4 that he expected the decline in industrial production to "stabilize" in the second quarter.
ÊAs Turkish industry begins to shift its stockpiles, the implemented tax cuts were not sufficient enough to trigger the necessary domestic demand to eventually cause an increase in production. This picture is clearly visible in the automotive sector, a locomotive for the Turkish economy, in which production slumped 42 percent.
There is a long to-do list for the government. The business world stresses that incentives should be given to production rather than new investments, while companies want to see steps taken that will lighten their debt loads. The government’s focus now should turn into analyzing the necessary steps it needs to take to increase production. Sadly, it does not have much ammunition.
One of the pillars of production is exports, which are wholly dependant on the global economic situation, particularly the economies of Western Europe. What can be done, therefore, to offer relief to manufacturers and increase domestic demand?
At this crucial juncture, all eyes will be on Economy Minister Ali Babacan who is expected to announce the government’s new mid-term economic program next week. If Turkey succeeds in getting the economy back on track, then there will be no doubt that it could see a return to the good old days as the global economy eventually recovers. Turkey otherwise could relive the nightmare of nine years ago.
Exports fell 41 percent to $7.4 billion in May from a year earlier, the statistics agency in Ankara said on June 30. Imports were down 44 percent to $10.8 billion. Manufacturing output dropped an annual 19 percent in May. Mining declined 13 percent and utilities such as power producers fell 5.5 percent, the data showed.
The figures also reveal sharp interest rate cuts and measures taken by the government to help to reduce the impacts of the global financial crisis, though not to the extent that was hoped. The Central Bank has cut its benchmark interest rate by 8 percentage points in as many months, taking it to a record low of 8.75 percent, to boost consumer spending and investment. Central Bank Governor Durmu? Yõlmaz said on June 4 that he expected the decline in industrial production to "stabilize" in the second quarter.
ÊAs Turkish industry begins to shift its stockpiles, the implemented tax cuts were not sufficient enough to trigger the necessary domestic demand to eventually cause an increase in production. This picture is clearly visible in the automotive sector, a locomotive for the Turkish economy, in which production slumped 42 percent.
There is a long to-do list for the government. The business world stresses that incentives should be given to production rather than new investments, while companies want to see steps taken that will lighten their debt loads. The government’s focus now should turn into analyzing the necessary steps it needs to take to increase production. Sadly, it does not have much ammunition.
One of the pillars of production is exports, which are wholly dependant on the global economic situation, particularly the economies of Western Europe. What can be done, therefore, to offer relief to manufacturers and increase domestic demand?
At this crucial juncture, all eyes will be on Economy Minister Ali Babacan who is expected to announce the government’s new mid-term economic program next week. If Turkey succeeds in getting the economy back on track, then there will be no doubt that it could see a return to the good old days as the global economy eventually recovers. Turkey otherwise could relive the nightmare of nine years ago.