Wednesday, April 6, 2011

Addendum to Hurriyet column: A Turkey’s growing pains

I would like to add a couple of points to this week's Hurriyet column:

First, as I explained in the answer to the comments to the column, the growth numbers hint that the government did not take much action against the crisis. Otherwise, the economy would not have contracted in 2009 and then grown by so much. Such large swings are not healthy and indicative of policy inaction. 

Second, to explain a reader's remarks that the government would have a better picture of the economy than quintessentially pessimistic economists: It is not only the economists: The government and the CBT accept the economy is overheated as well; that's why Econ. tzar Babacan and the CBT are so "fixated" on credit of late. I am arguing they took action too little and too late, Just as the policy response to the crisis back in 2009 was too little and too late as well. A recent column in Radikal makes the same point (in Turkish).

As further proof on whether the government is managing the economy well: The government was expecting a much lower growth rate as late as September. That is another "soft proof" that the government lost the reins with growth...

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