Turkish economy in freefall

[Hannah Bell]

Last week, the Turkish Statistic Institute (TUIK) announced that Turkey’s economy shrank by 13.8 percent in the first quarter of 2009, compared to the same quarter a year ago.

This figure is even worse than the expectations of individual economists as well as financial and academic institutions, which hovered at around 11 percent.

Wholesale and retail trade, construction and manufacturing are the worst hit economic sectors. They recorded massive drops of 25.4 percent, 18.9 percent and 18.5 percent, respectively.

The rate of contraction in private consumption and investments accelerated significantly. Private consumption, which dropped by 4.6 percent in the last quarter of 2008, plummeted by 9.2 percent in the first quarter of this year. This is an even steeper decline than the one experienced during the devastating 2001 financial crisis.

In terms of real GDP, this figure marks the steepest quarterly decline in economic growth since 1945, when the economy was in depression due to the Second World War.

When calculated in terms of the US dollar, the contraction in the Turkish economy is 29 percent. This is mainly due to a loss of value suffered by the overvalued currency (Turkish lira) under conditions of economic crisis. Before October 2008, when the tidal wave of the global crisis first reached the shores of the country, an overvalued lira was used to inflate the country’s GDP in dollar terms.

In addition to sustaining a 13.8 percent contraction in fixed prices, the Turkish economy recorded a 2.2 percent decline in current prices in the first quarter of the year. This is a “first” in the modern history of Turkish capitalism and points out a very dangerous trend of wage deflation.

http://www.wsws.org/articles/2009/jul2009/turk-j07.shtml

[Hannah Bell]

1. kick

[leftstreet]

2. Gosh, this sounds kinda familiar

The so-called “secular” wing of the Turkish bourgeoisie—mainly 500 members of the Turkish Industrialists’ and Businessmen’s Association (TUSIAD)—and its representatives in the sphere of politics and media have already started to use the historic quarterly contraction data to increase pressure on the government to sign a new stand-by agreement with the IMF. This faction of the bourgeoisie justifies this demand by claiming that a new IMF deal would restore confidence in the markets while providing financial resources to ease choked financial channels. When translated into plain language, this means: We have massive foreign debts, we took advantage of them during the fast economic growth period, but now we want the government to become the guarantor of our debts.

Interesting snip:

Up to now, the financial sector has emerged largely “safe and sound” when compared with the non-financial corporations. The profits of banks and other financial institutions remain very high.

Almost all of the commentators attribute this to the reforms of the post-2001 crisis period. Although there is a grain of truth in this assessment, avoiding a financial crisis was mainly due to an inflow of unregistered capital to Turkey worth more than US$18 billion since October 2008.

No one knows the major source of this inflow, and the Central Bank, which issues these figures, is unable to provide a convincing explanation. But one thing is for certain: without this inflow, Turkish capitalism would experience a serious financial crisis more or less simultaneously with the ongoing economic crisis, which would also exacerbate it immensely.

[Hannah Bell]

3. yes, it does. another thing sounding familiar is the cutbacks on social protections

& the channeling of the "savings" to the rich lenders.

it's beginning to sound like it's the world-wide program.

nearly every country has a debt problem.

to whom is all the money owed, then?