Monday, April 13, 2009

Quick take on revised forecasts of the Turkish economy

Nazim Ekren is going over the government's revised economic forecasts as I write this blog. Here are some headlines, as reported in the newsgroup Research Turkey:

- Turkish economy will contract 3.6% in 2009
- Growth rates for following years 3.3% in 2010, 4.5% for 2011 respectively
- Current account deficit prediction for 2009 11 bln $
- Unemployment rate will increase to 13.5% in 2009

Just a quickie on growth: I was one of the first to go for a significant negative growth (-5%) for 2009. It is good to see that the government has now officially adopted the consensus growth forecast for 2009. On the other hand, I see the market expectations of negative growth in 2010 a bit overpessimistic (I never thought I could accuse anyone with that, usually being more dismal than the average guy- after all, this is the dismal science we are talking about). I think there is a herding/psychological element involved there. Anyway, I see growth at 2-3% next year, so despite the huge difference with market expectations, I see the government's 2010 growth goal not too unrealistic.

BTW, the market's negative 2010 growth expectation is also in sharp contrast with expectations of a large IMF program, as the IMF money will affect growth not much this year, but the next. Needless to say (then, why am I am saying it?), it is also in contrast with expectations of a global recovery in 2010. In fact, I am thinking about devoting next week's column to such inconsistencies in the Turkish economic thinking, as there are plenty- sort of a Hitchhiker's Guide to the Turkish Economy:). Anyway, you should definitely make up your mind on which story you are buying- I am no trader, but I know that wherever there are inconsistencies, there are money-making opportunities.

As an side point, the top brass of the Economy went over many issues, including debt, fiscal policy, IMF and the like. So, if you are interested in the Turkish economy and do not speak the language, definitely have a look at Hurriyet Daily News & Economic Review tomorrow.

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