Turkey’s prime minister has expressed optimism about the ongoing global financial turmoil, saying the crisis has already reached its climax and that the strength of its effects will now begin to decline, but this has been met with criticism from Turkish businessmen and academics, who do not share his enthusiasm.

In an address to the nation on Sunday, Prime Minister Recep Tayyip Erdoğan said, “No doubt, the impact of the global financial crisis will be felt for a long time and it will take a long time to find a remedy for the crisis,” but added that everyone must continue seeking their targets without falling prey to pessimism. He stressed that Turkey will continue to take all necessary precautions to avert the crisis or even turn it into an opportunity. He criticized some circles that he said “have been speculating to benefit from the gloomy atmosphere of the crisis.” His optimism was rejected by many academics and businessmen, however.

For Seyfettin Gürsel, professor of economics at Galatasaray University, it is quite difficult to claim that the crisis has reached its peak. "If something like this were true, US Treasury Secretary Henry Paulson wouldn't hesitate to announce it," he said. Gürsel noted that experts on the global economy generally hold one of two primary theories regarding the recovery process that will follow the current crisis. According to the optimistic scenario, stagnation and recession in the world's major economies will end by the second half of 2009, and an upwards movement will then commence. "This will have positive effects on our economy as well," he said. In the second, more pessimistic scenario, savings in the US and Chinese domestic demand will have to increase before recovery can start, and this could possibly take two to three years. "Which one is true, I don't know, but it is clear that Erdoğan is wrong in his claim that the worst has passed. It would be very difficult for the recovery to start today or tomorrow," Gürsel explained.

İbrahim Öztürk, professor of economics at Bosporus University, was also not as optimistic as the prime minister. The amount of bad news and the drastic movement in the global economies have decreased, but there is still a long way to go before things start recover, he said. There may be a few reports of collapsing companies, but these will not be as frequent as in the past few months, he noted. The bottom point has not been reached, but negative developments have slowed considerably thanks to recent measures, he argued. "The recovery will take a long time. The bottom line of the global recession graph will be a long line at the bottom of large U-shaped figure, unlike in Turkey's 2001 crisis, which had drawn a V-shaped curve," Öztürk said.

Turkish Confederation of Young Businessmen (TÜGİK) Chairman Hazım Sesli said the impacts of the global crisis were approaching Turkey's non-financial sectors gradually, "as one wave after another." The economies of Turkey's major export markets have contracted up to 30 percent due to the crisis, he noted. As a result, the companies are adopting a guarded stance by pushing out workers, slashing costs and taking a number of financial measures, he said.

Sesli also claimed that Turkey is fairly accustomed to hardship owing to its experiences in previous crises, particularly the one that hit Turkey in 2001. This has given Turkey a relative advantage in coping with the hurdles of this crisis in a more effective manner, he added.

On the economic package that the government has said it will soon announce, Sesli said the measures are already late and expressed hope that the package would be "full." The content of the package needs to be meaningful and expressed clearly, he stressed. For him, one of the most important points of the package must be steps aiming to decrease the costs of production and empower manufacturers with advantages over their international competitors. Also, the money that is expected to be allocated to Eximbank as additional loan resources must go to exporters in the most effective way. The value-added tax rates for leasing companies must be lowered to 1 percent monthly in order to boost investments, he said. Sesli also emphasized the importance of a tax amnesty and the extension of current incentive programs for at least two more years.

Turkish Union of Chambers and Commodity Exchanges (TOBB) Chairman Rifat Hisarcıklıoğlu said the worst of the crisis has yet to arrive in Turkey. Speaking to businessmen and industrialists in İskenderun on Tuesday at a conference organized by the İskenderun Chamber of Commerce and Industry (İTSO), he stressed that Turkey needs a strong economy and a strong democracy to overcome the painful crisis. "Turkey is the 17th largest economy in the world, and to enter the top 10, its constitution has to be made more democratic one and its laws on political parties and elections must be amended," he said, adding that Turkey also needs legal reform along with radical changes in public management and tax systems.

He did express some optimism, pointing out that the current account deficit has declined from $50 billion to around $35 billion thanks to falling energy and raw material prices.

Turkey's biggest problem, he said, is unemployment. "Every year, 700,000 young people have to find a job. Two-and-a-half million people are unemployed and 2.6 million are looking for a new job. We have to increase the number of entrepreneurs to be able to create new jobs for them," he explained.

The same issues were on the agenda of Nazım Ekren, deputy prime minister and minister of state for coordination of the economy. Ekren claimed, like Erdoğan, that Turkey was among the countries that would sustain minimal damage from the crisis because of external financing opportunities and external demand.

At a breakfast meeting with the Economy Reporters' Association (EMD) in Ankara, he said Turkey's small-scale presence in the world economy was a good asset protecting it from the harsh waves in the global markets. "Turkey's foreign trade volume accounts for nearly 1 percent of global commerce, and the same thing is also true for global capital movements. In summary, Turkey is in the midst of a process of integration," he explained.

Ekren said external resources are definitely of the utmost importance for achieving high growth rates. "However," he added, "utilizing our own resources is also very important."

Ekren, like Erdoğan, said the world economy will soon enter a process of recovery and that this will likely last until 2012. Referring to capital injections by major economies, which have so far totaled nearly $6 trillion, the minister said the current level of liquidity seems to be sufficient for world markets but that it is not able to trigger growth and further investment in the world. "This stems from a lack of confidence," he added.

Speaking at a separate event, Finance Minister Kemal Unakıtan also commented on the global financial crisis and its effects on the Turkish economy, saying Turkey has so far managed to stay clear of the crisis thanks to its commitment to fiscal discipline and primary surplus targets. Speaking at the "Fiscal Committees Workshop," jointly organized by the Finance Ministry, the Undersecretariat of the Treasury, the State Planning Organization (DPT) and the International Monetary Fund (IMF) Public Management Department in Ankara yesterday, he said the crisis has caused ambiguity, economic slowdown and contraction in virtually all countries, forcing them to announce packages of economic measures one after another. "We have to take the necessary measures. We are taking them, and we will continue taking them," he stressed confidently. Pointing to the importance of fiscal discipline, the minister said the government is making every move in line with the limits of its revenue. He recalled the 2001 crisis, which erupted following news of a row between then-President Ahmet Necdet Sezer and then-Prime Minister Bülent Ecevit in which Sezer threw a copy of the Constitution at Ecevit, criticizing the government's inability to cope with corruption. "Now, throw as many Constitution booklets as you like, and nothing happens. Now you can even throw a huge volume of an encyclopedia and see that nothing happens thanks to fiscal discipline," he said.


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Crisis has stopped escalating, says deputy PM
Deputy Prime Minister and the government speaker Cemil Çiçek said yesterday that the ongoing global financial turmoil is now becoming less severe. Speaking to the press after yesterday's Cabinet meeting, Çiçek stated that Turkish Central Bank Governor Durmuş Yılmaz said during the meeting that the crisis is now losing pace in the world. Yılmaz briefed the ministers at the Cabinet meeting basic monetary policy issues and on studies conducted for the transition to the Turkish lira (TL) in the new year.

In his presentation, Yılmaz said the central bank would take new measures if the liquidity problem gets worse. According to the central bank, the Turkish banking sector is now in good shape; there is no serious deficit that would put the banks at risk. "Capital adequacy in Turkish banks is higher than the EU average. The banking sector is well prepared for the crisis with its strong foundations," he said. "Increasing risk concerns and problems that the non-financial sector faces due to the crisis have led to a slowdown in the domestic market," Yılmaz said.

Asked about guarantees for bank deposits, Çiçek stated that the Cabinet has not yet decided to increase the state guarantee for bank deposits. "We are not yet ready to make such a decision," he noted. Çiçek also said the government is continuing studies on reducing the cost for public tenders by 15 percent for local companies, a move to encourage Turkish companies to be more involved in tenders. Çiçek also announced that the Cabinet had decided that the official holiday for Eid al-Adha, also known as the Feast of Sacrifice, will be nine days.

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