About the economy - HATICE KARAHAN

About the economy

The fluctuations in the financial markets have been continuing dynamically for a while. While the movements we have observed within the last weeks are coming to a sharp state together with the global wave crashing developing economies, some flows regarding the special situation in Turkey together with these speculative movements have triggered this situation as well.

Previously, I have pointed out the relevant subjects and the importance of clarity of mind in Turkey with regard to the economic policies in my piece titled “Today, the Future and the Peak” and also in my previous articles. As a matter of fact, within the framework of the impression I received from foreign investors in the last period, I can clearly express that some incomplete, unreliable and unbelievably odd information flows cause the perception gap about our economy to grow. Therefore, at this point, I think that corroborating the communication both toward both today’s and the future’s appearance plays a key role.

Global Wave… I carefully avoid falling into repetition in my pieces. However, while drawing the current frame, I have to mention some points again. As I have highlighted before and as it is well known, some developments in monetary policies, especially of the U.S., have burdened an extra pressure on the shoulders of the rising economies in the last period. Loosely speaking, it is an undeniable fact that Turkey is being affected from this just like many other developing economies.

Skewed News… However, it is also a fact that developments out of our control do not come from only this channel. Unfortunately, some skewed and fake news about our economy have been placing a great pressure on our markets with an accumulating effect for months. We all remember those folderols very well, among which there were astronomical fines to our banks and the claim that capital controls will be implemented on the economy. The baseless rumors becoming incessant in the process we experienced brought fluctuations with it and had a wearing effect. Those incoherent lies about Halkbank put forward the other day is an example showing that this subtle chain is continuing. It goes without saying that the objective is creating panic.

Incomplete Information… Let’s continue step by step. Behind the scenes of the recent market developments including the devaluation of the Turkish Lira, there are incomplete information and reports partly caused from this information in the next phase right after the false charges and baseless news. I have written in detail before: The report which declared the lowering of Turkey’s credit note and included both wrong and incomplete information sets an example for this. And the deterioration of the perception caused by such decisions, too…

Beyond this, to give a general example about the level of reliability of information and the evaluation, it is not hard to talk about Turkey’s fiscal discipline. Indeed, the assumption that the burden that will be caused by distributing bonus’ to retirees will turn the scale significantly is taken as a base. However, the fact that the government has already calculated to balance the equilibrium through various items including restructurings before signing off on such a burden is being overlooked. I am skipping details such as revenues and the nominal base and I refer to my old articles for such matters. The point that I should underline here is: The government is not making these decisions thoughtlessly, and it is planning the permanent disciplinary measures that are being aimed to take part in the new medium-term programs for the upcoming years. And at the very core, it is necessary to comprehend well that the ruling Justice and Development (AK) Party government which has ensured successful years for the economy through fiscal discipline can never put this strong gain away. As our Finance Minister Naci Ağbal has highlighted previously, there is a resolute determination regarding this matter.

Another stable area in which some concerns are trying to be formed is our banking sector. The rumors that the restructurings will unsettle the banking sector are unfortunately pulling our sector, which has proven its strength today with various indications, down from its rightful place. Especially at a time when the rate of the worrisome credits is very low, and concessions to this anchor are unthinkable.

What Needs to be Done… In the next phase following these misunderstanding, there are certainly some sensitivities in the economy. Among them, developments about inflations can be given as an example. And also the expectations about monetary policy…

There are things to do about the risks caused by the current deficit and foreign debts as well as inflation. In order to bring the relevant indications to more reasonable levels for taking our economy forward on more solid bases, we witnessed some meaningful moves, especially in the last period. Reaping the fruits of these will be possible in the course of time. However, as President Recep Tayyip Erdoğan highlighted in his election manifesto, the primary points of the new era will focus on these matters insistently.

Within this context, all the policies must continue in harmony. For this reason, the reforms and fiscal policy have to be in line with the monetary policies in the new era. Moving on in accordance with international principles in monetary policy is also among the highlighted points.

Within this scope, another related element is foreign relations. As a matter of fact, while the geopolitical elements affect the developments in the markets in our tough geography, our global relationships, especially the ones with the U.S. and the EU, play a role here. At this point, while some disappointments Turkey had in the recent years with other countries impacted the development of these relationships, the constructive attitude adopted by Turkey against all odds should not be overlooked. Thus, as President Erdoğan pointed out when he declared his election manifesto, it is necessary to highlight that this attitude and later on the normalization in the relations as well as power-seeking will continue.

As a result, aiming for a program including steps that will strengthen the economy against internal and external impacts while simultaneously maintaining measured and detailed communication will be the main dynamics of the new era.

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