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Columnist Erdal Sağlam reports that sentiment is worsening among Turkish businessmen and bankers, who now expect the AKP government to produce a robust plan to address their concerns. This article appeared in the mainstream daily Hürriyet on 6 October, 2007.
Translated from Turkish by Tim Drayton.
Within economic circles, where the word in any case is that it is impossible to predict just what external influences will be felt next year but that it is impossible for Turkey to remain unaffected by the international business cycle, with every day that passes sentiment becomes more pessimistic as to the future sustainability of the “medicine for all ills” of high growth.
The failure of the new government since the election to grasp the nettle and take steps to stem loosening financial discipline only serves to heighten such concerns.
With respect to uncertainty in the economy, the appearance of political debate, such as the referendum and constitutional change, which will lead to a questioning of the system and increase polarisation only serves to depress sentiment further.
The expectation in economic circles is for a robust, timetabled and detailed “Exit Plan” which will include mechanisms for removing uncertainty over the future and permitting growth to be sustained over the coming period. The consensus view is that such a robust programme alone will be capable of alleviating pessimism in the markets.
So will such a programme emanate from the AKP government?
I have to report that this question engenders great confusion. When I posed the same question to bankers who had visited the ministers responsible for the economy in Ankara just one day earlier, I saw that some of them were aware of the sloppy way the economy was being managed, while others said that “coordination” may well improve in days to come.
Meanwhile, the person nominated by Deputy Prime Minister Nazım Ekren as “his banking consultant” has left bankers in a state of shock. The appointment as a consultant of a person who has long been known for his sectarian attitudes towards the sector, a person who has famously been cold shouldered in the sector, for Nazım Ekren to have taken such a decision, has left them astonished.
Confusion also reigns as to whether the ministers for the economy are prepared for the dangers that will be thrown up by the international economic cycle in the coming period. They feel that Minister of State Mehmet Şimsek has such matters well within his grasp and that he comes to the fore with his technical character and knowledge, but they are uncertain as to how much influence he will be able to exert over this process.
A NEW ANCHOR IS ANTICIPATED
What both bankers and the general business world expect of the government is for a comprehensive programme to be drawn up and presented that will at last enable them to see the way forward. Spokesmen, who state that this may be the heralded “Urgent Action Plan” and that, in addition to this, the 2008 budget and programme balances are important from the point of view of illuminating the way forward, say that they now anticipate a detailed programme. They state that attention will also be given to the way micro reforms are included in such programmes as are released along with the timetable for these, and at the same time to the effect that such reforms will have on budget balances. A banker, pointing out that as domestic demand slows down incomes decline and that there remain few potential one-off sources of income, said, “I mean, when a very sensitive domestic balance is put in place, it is certain that external pressure will be felt, whose dimensions are as yet unknown. The way all of this will be balanced, and how this balance will be reflected in the government’s drafts, is of crucial importance.”
Businessmen and bankers who, to use a different analogy, note that clarity is sought as to what the anchors of the new period will be, and, pointing out that the EU anchor will clearly loosen its hold and that there continue to be doubts as to the future of the IMF anchor, have said, “Questions will be asked as to what the new firm anchor will be in any programme that is announced and as to whether this anchor or these anchors can really hold the economy steady”. I have witnessed the fear felt by bankers that the current account deficit will rise and growth will fall below 5% in the coming period. In other words, the problems have grown larger and there has been a corresponding increase in anticipation as to the nature of the awaited solution programme for the economy. Let us see what happens.