Monday, February 28, 2011

So Much for the Shrinking Trade Deficit

The January trade balance was announced, and there goes my prediction that the import growth would slow down: At $7.3 billion, the trade deficit turned out to be much higher than market's ($4.1 billion) and my somewhat more conservative ($4.5 billion) expectations.
Reader Abe Rudder was quick to note my miss with a humorous comment:
Well, like everyone else (myself included) you also missed the target with a great margin. Pictures may be worth more than thousand of words but figures are always misleading :) at least when you are looking ahead.
I guess he is right. And he reminds me of the predictive power of economics of economists. Part of it has to do with the nature of the job, but the following words from Rower32 are worth thinking about as well:
A totally unrelated but funny quote from Warren Buffet's annual letter:
"John Kenneth Galbraith once slyly observed that economists were most economical with ideas: They made the ones learned in graduate school last a lifetime..." Just throwing it out there :)
So this is not a totally unrelated quote, after all:)...

Anyway, I did a pretty good job with exports, but imports just did not reflect fully the sharp fall in the VATs:
So what happened? I dunna!, but according to TEB Economic Research, "delay of tax payments by BOTA┼× (state-owned Petroleum Agency), could be reason for the disconnect between the tax payments and import volume in January." They also note that "if this is the case, this would mean that other energy enterprises could be accumulating arrears to BOTAS"...

Anyway, if you want the whole nine yards on the trade deficit, have a look at what Citi economists have to say. Incidentally, they adopt a similar line as me, on the impact of the MENA turmoil on the Turkish economy- this week's Hurriyet column, which I have yet to post to the blog...

1 comment:

Anonymous said...

I am convinced that the only way Turkey could simultaneously close its huge trade deficit and sustain a high growth rate (and bring down unemployment) is by manipulating its currency to gain a competitive advantage, like China, Korea and Taiwan do and Germany, Japan and some other countries did back when they were developing countries. Why oh why can't we do this?