Wednesday, July 1, 2009

Live blog from post-crisis global economic order and Turksih economy conference (II)

Cevdet Akcay:

thinks out of three channels, trade, finance, expectations, the two are exogenous. Domestic finance was affected by expectations. Interestingly, crisis source countries contracted less- maybe there are some threshold levels above which you are insulated from the crisis.

Thinks expectations management is very important. In fact, Turkey looked perfect to be insulated from crisis (large consumers, not too much exports, not too deep financial system). So why the 13.8?

Expectations management should be done by Central Bank. Thinks CBT did a very good job in that.

Turkey will have to live with CA deficits because of siZe, demographics and production function. Turkey is sort of US of EM.

How will you increase savings? Middle class appeared recently in Turkey, they are starting to consume, they will not save right away. Corporates can't save. No agents to save, so saving will come from foreigners!!!

Expects industrial production inptovement to continue in May.

Inflation expectations seem to hit a wall. There is inertia there.

Normalization sign: real rates falling and TRY appreciating. But cautious: this can go the other way as well. But now like developed countries, real rates falling, but TRY weakening.

BUT: export import difference closing down- not big contribution to net exports anymore. Also credit flow has slowed down recently again (my points).
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