According to the Turkish Statistics Institute (TurkStat), Turkey's gross domestic product (GDP) expanded by 8.2 percent in the July-September period, marking the eighth quarter in a row the country's economy has grown. The third quarter growth rate was way beyond the market expectation of 6.3 percent. “That much expansion made us the second-fastest growing economy worldwide, after China, in the third quarter. We expect our economy to grow no less than 4 percent next year,” said Industry, Science and Technology Minister Nihat Ergün, speaking on a program broadcast by a private TV station shortly after the announcement was made.
With this latest announcement, the country's economic growth rate for the first three quarters of this year was ascertained at 9.6 percent. The minister also said all outside observers may have to revise their economic growth forecasts for Turkey for 2012 as the country's GDP continues to exhibit a speedy growth performance, with most experts downplaying the possibility of a hard landing. The International Monetary Fund (IMF) estimates that the Turkish economy will grow by 2 percent next year.
“We, on the other hand, project a 4 percent economic growth rate in our Medium-term Economic Program [OVP]. This is, I must say, a very prudential estimate, but there are dynamics within the Turkish economy that refute simple math, such as two times two equals four. This is what leads the Turkish economy to grow at levels beyond expectations,” Ergün noted. According to the OVP, the economic expansion in Turkey is expected to be sustainable at a rate of 5 percent from 2013 onwards.
In line with the country's continuous economic growth, the government expects unemployment to remain below 10 percent until 2015, the period covered in the OVP. Two years ago, unemployment hit a staggering 15 percent level because of the global financial crisis triggered by the credit crunch in the United States. Thanks to the government's emphasis on creating more jobs for Turkey's young population through incentives given to private enterprises as well as the country's swift recovery from that turmoil, the unemployment rate dropped to as low as 9.2 percent in May according to the latest official data.
In a written statement following the announcement, Economy Minister Zafer Çağlayan also joined Ergün to hail Turkey’s achievements in the field of economic growth. “Turkey, which has differentiated itself from other world economies with the economic growth performance it has shown in the first two quarters of this year, proved once again its difference by growing beyond expectations in the third quarter. However, that was not a surprise for us nor for others. This is only making everyone [else] marvel,” he said.
Outpacing Turkey in terms of economic growth in the July-September period was China with 9.1 percent. Other world economies that have shown strong growth performance in the third three-month period of the year were tiny Baltic nations Estonia and Latvia as well as India.
Visible improvement in CAD
Adding to the joy was a statement released by the Central Bank of Turkey on the country’s balance of payments figures. According to that statement, Turkey’s CAD was $4.2 billion in October, nearly 35 percent lower than what it was in September.
The announcement on the visible improvement in CAD came less than two weeks after the bank’s governor, Erdem Başçı, told reporters at a press conference in Ankara that there will be a “noticeable recovery” in CAD starting from the last quarter of the year. He said that improvement will come thanks to measures taken by the government and his central bank. Recalling that the CAD saw an increase in September to its highest level in 18 months, Başçı said this was a “temporary” increase and that the final two months of the year will see a big reduction of that gap.
Mainly emerging from the foreign trade deficit, the CAD has become a structural problem for Turkey. The country’s export volume reached $114 billion last year, up from below $100 billion in 2009. In addition, the country is set to earn $135 billion from exports this year; however, despite such a rise in export revenue, its CAD spiked to nearly 9 percent of the GDP due to the rising energy bill and industry’s dependence on foreign intermediate goods to produce products to be sold overseas. Some say, therefore, that the widening CAD is a serious issue for Turkey. According to most observers, however, including the former vice president of the country’s Privatization Administration (ÖİB), Süleyman Yaşar, this interpretation is disconnected from facts. Turkey’s CAD used to be big because of its high public debt, but today it has such a gap mainly because of private, not public, indebtedness, Yaşar said in an interview with Today’s Zaman on Nov. 13, and there is no apparent problem for private entities, including banks and other corporations to pay their debt on time. “Even if they default on their debt, there will be no direct impact on the country’s balance of payments since there is no state guarantee on those private debts,” he added as part of his remarks.
According to the government’s OVP, Turkey’s CAD is expected to be 8 percent of its GDP next year, and the CAD-to-domestic output ratio will drop to 7.5 percent in 2013 and to 7 percent in 2014. Presently, Turkey is seeking to find oil and natural gas in the Black and Mediterranean seas as well as in mainland Anatolia, its territory located on the Asian continent. At the same time, it has also introduced incentives to encourage investors to develop renewable energy projects to reduce the amount of money it spends on purchasing energy from overseas, nearly $50 billion each year.
Experts applaud Turkish economy
A number of experts have also given their take on the Turkish economy’s performance based on the latest official figures related to economic growth and balance of payments. For Gökhan Uskuay, director of Strategies at Global Securities in İstanbul, the third quarter economic growth eased worries surrounding the health of the Turkish economy next year. “This is very positive as it can reduce the worries over economic growth in 2012,” he told the Anatolia news agency.
Also speaking to Anatolia, EFG İstanbul Securities Chief Economist Haluk Bürümcekçi said the third quarter economic growth indicated that Turkey’s economy will grow beyond expectations this year. “What was different in the third quarter was that we had a foreign trade surplus this time whereas the overseas demand always used to be decreasing the economic growth in Turkey as it produced a foreign trade deficit. This is important because it means the domestic demand has dropped more than the overseas demand. This is something [the Turkish government and central bank] aimed to achieve. There is a slight slowdown in both consumption and investments. These drops will be more visible in the last quarter but Turkey will end this year with a strong growth,” he said.
Having a similar prediction was economist Gülay Elif Girgin from OYAK Investment. Also speaking to Anatolia, she said they had to revise their economic growth forecast for Turkey from 7 to 8 percent for this year based on the latest available data.
İstanbul Young Businessmen Association (İGED) Chairman Hüseyin Ataol, on the other hand, agreed with Minister Çağlayan that 8.2 percent economic growth in the third quarter was no surprise. “This is the outcome of successful economic policies. Today, Turkey is a country that exports what it produces and the third quarter growth rate is an accomplishment as it came despite the crisis in Europe. This also is an indication that the world economy is not completely dependent on Europe,” he said in a statement on Monday. |
Source : todayszaman.com
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