Friday, June 26, 2009

Live from WB GDF Istanbul launch (I)

Hakan Ates, Denizbank:
Good start with a summary of worries from 2 years ago- major themes then were globalization, more liquidity, and ABS-related worries.
Does not think return to 1930s because of the humongous fiscal monetary support. But it won't be easy for the policymakers because of exit strategies, i.e. 1. Fiscal worries 2. Central Bank asset blow-up- inflation pressures. But policymakers can not exit too soon because of the Japan example. He believes return to the past will be slow and hard.
ED: nothing original, but a decent summary of recent economic developments.

Mark Thomas, chief economist, WB Turkey office
Says TUSIAD is main source for Turkish private sector- ED: uppppssss:) what about SMEs?
3 messages on Turkish economy: 1. Turkey has been hit by the crisis. But signs of bottoming out seen. 2. Turkey has the tools to manage in the post-crisis economy. 3. But we can not be complacent, as post-crisis will be more difficult.
Why turkey hit hard: 1. Exports fell a lot. 2. Domestic financial system is one of low leverage and high risk aversion since 2001- they pulled back. We talked to IFC clients and heard many stories of how finances became more difficult. The good news is that channel has recovered (ED: I am not sure). 3. Real side: in a period of high growth, Turkey invested a lot. In the uncertainty, companies took a step back. Now, better as inventories have been depleted. Many foreign companies have not cancelled investment plans, just delayed. ED: but real sector confidence does not support this story.
Also, corporates have been able to rollover debt and paying back as they delayed investment plans. Turkey is able to raise capital.
3 strengths of 2001: 1. Turkish banking system is very strong and robust to shocks. 2. Turkish public debt half of levels a few years ago. 3. Many globally competitive firms in Turkey. Able to finance themselves.
3rd message: Now is not time to be complacent. 3 areas: 1. Fiscal plan: crucial now to put medium term fiscal framework. Tax policy tax admin. improvement needed. 2. Labor market: measures to increase labor force participation. 3. Social policy: education, improving quality of workforce. Ireland has done this successfully (ED: really good example).

I will summarize the panel later on, as I do not want to miss out the nice charts...
Sent by BlackBerry Internet Service from Turkcell

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