This post already appeared in the Hurriyet Daily News last Monday (I forgot to submit it last week); Europe Economonitor is just republishing it, but I just wanted to cross link for the readers who might have missed it the first time around...
One small update to the post is in order. To quote directly from my article, I was arguing that:
One small update to the post is in order. To quote directly from my article, I was arguing that:
On the real sector front, while consumer confidence finally managed to break free from the 78-82 range it had been hovering around for the past six months, contrary to the consensus view, a fast recovery is not in the bag, especially if once you adjust for last year’s low base.Even with a fast recovery, unemployment is likely to decrease very slowly, as last week’s January release shows. It is maybe this employment outlook or maybe the looming referendum and general elections that are preventing the government to curb non-interest expenditures, but whatever the reason, fiscal policy is not supportive of the Central Bank’s gradual exit strategy.
So far so good. BUT: The first data of April, capacity utilization and real sector confidence, both from the Central Bank's monthly business tendency survey, came in quite strong on Monday, making the case for a fast recovery. As loyal readers would know, I am always in favor of a picture rather than 1,000 words, so here you go, compliments of Turkey Data Monitor:
Kapasite Kullanim is capacity utilization (right axis, blue). I prepared this graph in Turkish last night for the place I am not supposed to talk about (that does sound like Valdermort a bit), so I was kind of lazy to get the same graph in English:)
Moreover, although I can't say how I reach this conclusion, unemployment could be decreasing more than what would be accounted for seasonality, which I present here for your convenience:
Again, this is for the not-to-be-named organization, and therefore in Turkish: The columns are the difference between March and April for unemployment (red) and non-agricultural unemployment. All I am saying is that unemployment tends to decrease by most around 1% from March to April. Not a very sophisticated methodology, but it is way too late for time series:)
WOW! I am used to getting disproved, but usually in a few weeks, if not in months. A week? That's a first, even for me....
Joking aside, despite Monday's data have lifted the hopes of even a perennial pessimist like me, it is still kind of early to say for sure that the economy is on-track for a fast recovery; after all, this is one month's data. But just think of of the consequences, for Central Bank tightening and consequently for the interest rates and the lira if the speedy gonzalez recovery does materialize.
Kapasite Kullanim is capacity utilization (right axis, blue). I prepared this graph in Turkish last night for the place I am not supposed to talk about (that does sound like Valdermort a bit), so I was kind of lazy to get the same graph in English:)
Moreover, although I can't say how I reach this conclusion, unemployment could be decreasing more than what would be accounted for seasonality, which I present here for your convenience:
Again, this is for the not-to-be-named organization, and therefore in Turkish: The columns are the difference between March and April for unemployment (red) and non-agricultural unemployment. All I am saying is that unemployment tends to decrease by most around 1% from March to April. Not a very sophisticated methodology, but it is way too late for time series:)
WOW! I am used to getting disproved, but usually in a few weeks, if not in months. A week? That's a first, even for me....
Joking aside, despite Monday's data have lifted the hopes of even a perennial pessimist like me, it is still kind of early to say for sure that the economy is on-track for a fast recovery; after all, this is one month's data. But just think of of the consequences, for Central Bank tightening and consequently for the interest rates and the lira if the speedy gonzalez recovery does materialize.
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