Tuesday, September 22, 2009

On Turkish 2Q GDP

Anil, one of my few loyal readers, wanted to know how the 2Q growth figure compared to LR growth rates. As I always say, a picture is worth more than a thousand words:

In fact, you get even more insight from looking at the longer run:

Two points are in order: First, the slump of the last two quarters does not fare well in historically. Second, in the Turkish growth story, it's all about volatility. Here's a country that has a potential to grow 5-6% a year even without the much touted-for structural reforms, and manages that for a few years, only to lose all the gains in a year or two when a crisis hits. In fact, this point could be better illustrated with the the growth history of the country since the republic:

The second point leads me the comment from Eren, another loyal reader, who thought the 3.5% growth rate in Medium-Term Economic Program is not very realistic. I happen to have a similar forecast for 2010, and it is mainly because of the weak 2009 base. This also validates Anil's point that comparing to the previous year does not make sense, especially when there are huge swings, i.e. structural shifts in Econspeak. In such cases, it might be better to look at seasonally adjusted quarterly changes:

What do I get out of this? You don't need to be an economist for asking smart Economics questions. Thanks, Anil! Thanks, Eren!


Anonymous said...

Not so fast, emre. :P Kendimi dünyevi işlere vererek econ camiasından ayrı düşmüş olabilirim. Ama hasbel kadar bir econ diplomamız var bizim de kendimize göre . Öhö, Öhö yani.

Emre Deliveli said...

Estagfurullah:) Mantasim da hic caktimaz ama o da cok pis ekonomisttir aslinda:)