Q3 growth rate 2.6-2.8 pct - KEREM ALKIN

Q3 growth rate 2.6-2.8 pct

Tomorrow, growth data for the third quarter of 2015 will be announced. Despite political tensions, civil war and troubles related with global trade and growth in their region, the players of the Turkish economy have been making an effort to maintain growth in production of goods and services. Depending on the struggle of the Turkish real sector to stand, economy grew 2.5 percent in the first quarter of this year and 3.8 percent in the second quarter. The data on industrial production announced in October have been above market expectations.

An increase of 4.6 percent compared to October of the previous year, in spite of the political uncertainty before the Nov. 1 elections, has been showing the struggle for production and export.

This situation strengthens the possibility that the growth rate will be higher than expected in the last quarter of the year as well.

In light of July-September data, which I confirmed once again and according to calculations I have been making for 10 years with the primitive methods I use, I am expecting the Gross Domestic Product (GDP) growth rate in the third quarter to be between 2.6 percent to 2.8 percent.

With this prediction method, my prediction for the growth rate in the third quarter appears to be 2.2 percent at worst; 3.8 percent at best; with a 70-percent chance it would be between 2.6 percent to 2.8 percent.

If industrial production data indicating an increase of 4.6 percent for October becomes high in November and December, we can assume that with a growth performance that reaches around 3 percent in the last quarter of 2015, we will finish 2015 with a growth rate between 3.2 percent and 3.6 percent throughout the year.

Russia may be dragged into bankruptcy

With the Organization of Petroleum Exporting Countries' (OPEC) increasing the production quota of 30 million barrels, it has exceeded the quota over 18 months to 31.5 million barrels until members gathered again in June and Federal Reserve Bank's (Fed) increasing the interest rate that would almost be certain next week, the barrel price of Western Texas oil and Brent oil regressed to the lowest value since 2009.

Pioneered by Saudi Arabia, to protect their market share after OPEC decided to continue production the same way in the meeting on November, 2014 and by pushing out “shale” oil producers, which have high costs in the USA, oil prices declined by more than 40 percent.

According to the International Energy Agency, with the influence of Saudi Arabia, Russia and Iraq's increasing the supply global oil stock to almost 3 billion barrels.

Founding Partner of Again Capital hedge fund based in New York, John Kilduff, observed that with the first morning of OPEC without quota, a sharp decline has been seen and the Saudis doubled strategies to exclude producers with high costs. According to Kilduff, OPEC members are getting ready for a long game in order to return to their dominant position in the global oil market.

When global oil prices are under US$40 in 2016 and it continues in this trend for a while, there is no doubt that Russia's economic life and military operations may be in trouble.

By the end of the 1970s, Russia fell into the trap of the US “Star Wars” project, bankrupted by military and space expenses.

Now, with falling oil prices, Syria and Middle East operations may be the trigger for the second collapse and may make Russia more “chauvinistic” and aggressive. That is why Turkey's remaining calm and connected to the North Atlantic Treaty Organization (NATO) may be a good tactic.

Let's keep it together, even if Russia loses sanity

While the Russian warship was passing through the Istanbul Bosporus, however the “show” made by the soldier holding the missile on his shoulder in the shooting position on board was nonsense, it was essential that the Turkish side should show a coordinated and controlled attitude.

First of all, it may be useful that all the members of the cabinet should use a common language on the Russian issue and even necessary should be careful so that each minister would not give a statement.

Because, for example, when a minister mentions “burning the ships” because of the tension we have with Russia or says that we do not need anything from Russia, whereas another says we should not stop the trade and dialogue with Russia, this may lead to confusion.

That's why, in the Cabinet meeting on Monday I assume that, aiming to manage the Russia crisis, a “verbal intervention” model has been spoken.

The way to drive the Putin administration and Russian government into a corner goes through increasing the restlessness in the essential Russian business world.

Turkey's accelerating the precautions limiting the importation from Russia, from agriculture to the ore after finding the alternate resources, may increase the disturbance in the agriculture and mining sectors in Russia where the restlessness already reached severe dimensions due to the oil prices and not to overdose the sanctions towards Turkey, this time the pressure from the Russian business world may be more condensed on their own government.

That's why, for the statements and activities that would refute the Russian thesis, the successful studies of the Republic of Turkey, Prime Ministry Office of Public Diplomacy which have been observed for a few months, every minister's using a common language, everyone's talking about the same possible cost numbers and their effects are very important.

2016 will be hard for the oil producing countries; Russia may become tougher. On the contrary, being more coordinated let's deflect all the moves of the opposite side.





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