PM has washed his hands of it

This cryptic title simply refers to the attitude of Prime Minister Recep Tayyip Erdoğan regarding severance pay reform, which has been rotting in a drawer for a year.
PM Edoğan and Ministers at the Woking Council This crucial reform came back onto the economic agenda during the Working Council Meeting in Ankara on Thursday, where the prime minister made a speech about various labor market issues. Concerning severance pay reform, Erdoğan said that the government has no problem with it, but that they are waiting for their social partners to come to an understanding. Knowing the inflexible approach of the workers' unions on the severance pay issue, we can easily say that the social partners will never come to an understanding. What is at stake? The severance pay system in Turkey was established in the early 1970s, in a period where unemployment insurance did not exist. However, the severance pay system continued without any change even after the introduction of unemployment insurance in the 2000s. The severance pay system provides a lump sum payment of one month's pay for every year worked if the worker is fired for other causes than personal fault or when he reaches the retirement age. The right to severance pay is lost in the case of a resignation. These rules place Turkey among the countries with the highest severance pay -- at least when it is paid. Indeed, Social Security statistics assert that less than 10 percent of wage earners benefit from severance pay in reality. Minister of Labor and Social Security Faruk Çelik noted this fact during the meeting on Thursday. There are many reasons for this unacceptable situation. First, one out of every five wage earners is not registered in the social security system and therefore not eligible for severance pay. Second, many firms, particularly small ones, fire employees in the end of December and hire at the beginning of January to avoid severance payments, since they require one full year of work. Third, some firms, when they decide to fire a worker, they force the employee to resign; some even require resignation letters from the workers when they are hired. Fourth, when a firm goes bankrupt, it is very rare that its workers will get their severance pay. Actually, it is only those working in state-owned enterprises and in big private corporations who are most likely to receive their full severance pay. So, the current severance pay system benefits a minority of workers while encouraging informality in the economy. The severance pay reform prepared by the government envisages a regular monthly premium payment to individual accounts but at a lower rate than the existing one (1/12 = 8.3 percent) because it will be paid regularly and without conditions. The reform will not only make severance pay effective for millions of workers but it will have also some positive side effects such as a incentivizing domestic savings through increased financial literacy and the deepening of financial markets since the accrued premiums in individual accounts will be invested in financial assets for the beneficiary. Workers' unions, representing some 10 percent of wage earners, are strongly opposed to the reform project. They claim that the new system will diminish existing severance pay rights and will facilitate firings. They are threatening the government with a general strike if the reform is implemented. In fact, they are simply defending the interests of their handful of members. As for the employers' organizations, they are ready to accept the reform if it does not incur additional labor costs. Admittedly, a compromise is not possible under these circumstances. However, a possible compromise might be found in giving current formal wage earners the right to choose between the current system with its risks and the new system with its guarantees, as was recommended by Bahçeşehir University's Center for Economic and Social Research (BETAM) in a report on the issue. When I proposed this compromise during the debates for the 10th five-year plan in the Employment Commission, the representatives of workers' unions objected, claiming that they represent for the whole “working class” and not only their members. Those kinds of pretentions won't ever give way to a compromise. So, Minister Çelik may have to continue to look for “a magic solution,” as he confessed on Thursday. The critical question is: Who will defend the interests of the huge majority of workers that are practically prevented from accessing their severance pay rights? Erdoğan, by stating that he is waiting for the elusive compromise, has in fact, washed his hands of the issue and given up on what is his political responsibility.

Merkel'in Avrupa gündemi

Seçim zaferi tamam ama taviz vermek zorunda

Bugün ‘büyümenin kalitesi ve yetersiz tasarruf oranı’ hakkında yazmak istiyordum. Geçen hafta önce Başbakan Yardımcısı Ali Babacan, ardından da TÜSİAD Başkanı Muharrem Yılmaz bu konuda kritik açıklamalar yaptılar. Hatta bir çeşit itiraflarda bulundular da diyebiliriz. Ancak daha sıcak bir konuyu, Almanya’da Hıristiyan Demokratların seçim zaferinden sonra Merkel’in krizdeki AB’ye yönelik nasıl bir politika izleyeceğini tartışmaya karar verdim. Büyümemizin kalitesizliği ve düşük tasarruf oranı sorunu kolay kolay çözümlenemeyeceğinden bu pilav daha çok su kaldırır. Yine de İngilizce okuyan ve konu hakkındaki düşüncelerimi merak eden okurlara Today’s Zaman’da yayımlanan cumartesi ve salı yazılarıma (‘Babacan is not happy’ ve ‘TÜSİAD on domestic savings’) bir göz atmalarını öneririm.

Seçim barajının azizliği
Angela Merkel’in partisi CDU yüzde 42,5 oyla çoğunluğu az bir farkla kaçırdı. Geleneksel ortağı Liberal Parti ise 0,1 puanla (yüzde 4,9 oyla) yüzde 5’lik barajın altında kaldı. Keza Almanya’nın eurodan çıkmasını savunan yeni parti ‘Almanya için Alternatif’ de 0,1 puanla barajın altında kaldı. Bu iki partiden biri barajı geçseydi Almanya’da çok farklı bir hükümet kurulacak ve siyasal gündem çok farklı olacaktı. Liberaller barajı geçseydi eski tas eski hamam yola devam edilecekti. Alternatif Parti’nin barajı geçmesi durumunda ise Merkel belki de bu parti ile koalisyonu tercih edecek ve çok daha katı bir Avrupa politikası izlemek zorunda kalacaktı.
Artık ilahi takdir mi dersiniz yoksa Alman seçmenin sağduyusu mu dersiniz, size kalmış. Ben şahsen bu sonuçta bir kez daha baraj konusunun ne kadar saçma olduğunu görüyorum. Demokrasi paketinden baraj konusunda ne çıkacak bilmiyoruz. Yüzde 10’dan düşük ama nispeten yüksek bir baraj çıktığında Kürt sorunu açısından ileride Almanya’ya kıyasla çok daha dramatik durumlarla karşılaşabileceğimizi hatırlatmak isterim.

Merkel taviz vermek zorunda
Almanya’ya dönelim. Parlamento aritmetiği açısından Sosyal Demokrat Parti’nin (SPD) liderliğinde Yeşiller ve Sol Parti ile bir hükümet kurulabilir. Ancak Alman siyasetini yakından izleyen yorumcular Sol Parti’nin özellikle NATO karşıtlığı nedeniyle buna ihtimal vermiyorlar. SPD ile Sol Parti arasındaki tarihi husumet de cabası. Çok büyük olasılıkla hükümeti Merkel kuracak. Peki ama kiminle? İster SPD ile ister Yeşiller ile kursun, Merkel gerek katı AB politikasından gerekse içeride yürüttüğü ortodoks ekonomi politikasından taviz vermek zorunda kalacak.

Merkel, Güney Avrupa’ya karşı bugüne dek klasik kemer sıkma politikasında ısrar etti. Ağır kamu borcu altında ezilen Yunanistan ekonomisi büyük ölçüde, Portekiz ve İrlanda ekonomileri de önemli ölçüde küçüldüler. İspanya ve İtalya hâlâ topun ağzında. Ancak kemer sıkma toplumsal ve siyasal açıdan bir sınıra geldi. Buna karşılık borç sorunu hafiflemedi, aksine arttı. Bu ülkelerin ekonomik büyüme ile nasıl yeniden buluşacağı meçhul. Euro parasal birliği olduğu gibi devam edecekse, ki Merkel bunda ısrarlı, tek çözüm büyük bir borç silme operasyonu ile birlikte Almanya’nın daha yüksek bir enflasyonu göze alarak hızlı ücret artışları ile iç talebini arttırması. Hem SPD hem de Yeşiller bu iki radikal önlemi destekliyorlar.
Sonuç olarak yeni Alman hükümetinin farklı bir AB politikasına hazır olmalıyız. Buna karşılık Güney Avrupa’ya yapılacak kıyaklarına ve artan enflasyonun bir bedeli olarak Merkel’in euro ve enflasyon karşıtı sağcı Alternatif Parti’nin CDU aleyhine güçlenmesini göze alması gerekecek.

TÜSİAD on domestic savings

Turkish Industrialists and Businessmen's Association (TÜSİAD) President Muharrem Yılmaz said on Friday that the quality of economic growth will carry significant importance in the coming years, echoing recent comments by Deputy Prime Minister Ali Babacan.
Yılmaz added that Turkey's growth model needs to be reconsidered and that Turkey needs to take bold, determined steps in three areas: boosting domestic savings, successfully completing the settlement process with the Kurdistan Workers' Party (PKK) and making structural reforms. The settlement process is widely commented on every day by the columnists of Today's Zaman. Let me focus on domestic savings, which has multiple links with structural reforms.  TÜSİAD President Muharrem Yılmaz worried on savings and reforms The ratio of domestic savings to gross domestic product (GDP) has declined dramatically since 2000, from more than 20 percent in the 1990s to 12 percent in 2012. Low domestic savings is certainly the most important obstacle but not the only one to balanced, satisfactory economic growth. A sizable increase in domestic savings is a necessary condition for the growth regime to change, but it will not be sufficient alone. The Turkish economy must at the same time be able to export the surplus of goods that will not be consumed in the domestic market due to the increase in savings. If not, the economy will go into recession due to insufficient aggregate demand. We know this because of the “paradox of thrift” popularized by John Maynard Keynes. This paradox would be mitigated by Turkish industry strengthening its competitiveness, which would require radical reforms in education, innovation, etc., as stated by Babacan and reiterated by Yılmaz. The TÜSİAD president said that at least three percentage points must be added to the current domestic savings rate. This effort would not be enough, but it would certainly be welcome. Yılmaz noted policies in a five-year plan that aim to increase domestic savings: fighting the informal economy, strengthening the social security model, enhancing insurance systems and facilitating access to financial tools. I must say that even if these goals are achieved, they will hardly increase the domestic savings rate by three percentage points. Indeed, the first two policies aim to increase public savings. Public savings constitutes approximately 3 percent of GDP. Even if different aspects of the informal economy are addressed, such as the non-registration and under-registration of wage earners in the social security system, public income would only rise 0.3 percentage points at best, according to my estimations. If serious income tax reform to widen the tax base is implemented to complement the fight against the informal economy, then public savings would certainly increase further. Nevertheless, even a one percentage point increase in GDP -- which would mean more than a 30 percent increase of public savings -- would be a great success. That said, do not forget that increasing the average tax rate would also adversely influence the savings of households and companies through the crowding out effect. The remaining two percentage points should come from the savings of households and companies. Here we have a basic problem. In the case of household savings, I should remark that it would be very difficult to change the current consumption patterns of Turkish households. They have started to consume more, thus save less thanks to the credit glut and much lower interest rates than in the 1990s. Households are also much less worried about unexpected health expenses thanks to improved and extended social coverage. The two policies in the five-year plan aiming to boost private savings only “enhance insurance systems and facilitate access to financial tools.” These policies may well be helpful, but only marginally. The best tool in this area would be radical severance pay reform, but this reform project continues to rot in the drawer. So, what about the savings of companies? Nobody talks about this burning issue. Turkish corporations can save more if profits increase and are then invested instead of distributed to shareholders. The most straightforward way to increase profits would be to decrease wages, but this can hardly be done. The cost of labor may be lowered, but this would require difficult labor market reforms. Another option is the depreciation of the lira as this would boost export profits, but this has its limits because of high inflation. Indeed, the most effective option would be to increase productivity. This is possible if comprehensive productivity-enhancing reforms in education, technology and innovation are realized, as was underlined by the TÜSİAD president. We are impatiently awaiting them.

Babacan is not happy

At the İstanbul Finance Summit last Wednesday, Ali Babacan, deputy prime minister for economic affairs, made critical assessments of the challenges the Turkish economy is facing.
What impressed me most among these assessments was Babacan's confession about the nature of Turkey's ongoing economic growth. He is not happy with its quality. Me neither. Let me quote what he said about this controversial topic. Vice Prime Minister Ali Babacan worried about the quality of growth “When you look at the growth figures by themselves the picture isn't bad, but we have worries about the quality of growth. … We grew by 4.4 percent in the second quarter but the major source of this growth was domestic consumption and a little bit of public spending. We observe decreases in private investment as well as in net exports. … This picture is not one we would like to see. In fact, we would like to see the opposite. We want to have growth based on both private investment and exports. Yes, we grew by 4.4 percent, but what made up this growth doesn't make us happy. When growth is based on these factors [private investment and exports], the impact of growth on the current account deficit [CAD] is positive. However, when the growth is based on consumption, the current account deficit widens.” Babacan added that the government will make efforts to improve the quality of growth. Before explaining why this assessment, which in fact simply repeats the well-known problem of ongoing growth, seems critical to me, let me remind you of some misperceptions regarding Turkey's second-quarter growth. As I tried to explain in my Sept. 9 column (“Two different narratives of growth”), the causes of the second-quarter growth vary depending on the analytical perspective. Babacan is looking at yearly growth (the change in gross domestic product [GDP] from the second quarter of 2012 to the second quarter of 2013), and what he says is true. Nevertheless, quarterly growth (from the first quarter to the second quarter) is different in two respects: Private investment contributed positively, albeit quite moderately, to growth, while public expenditure has significantly slowed. However, let me add that negative net exports continued to widen the CAD. Of course, those nuances don't change the global picture: Turkey's real economic growth is basically based on private consumption and the CAD is widening at a time when the international liquidity glut will be ending sooner or later. The Fed's recent decision to leave the quantity of its asset purchases unchanged only postponed the end of the party for a few months. The only virtue of the Turkish economy's current situation is the government's insistence on fiscal discipline. Babacan underlined this insistency once again at the financial summit, saying that the government has never compromised on fiscal discipline during elections and won't compromise this time, either. He warned that if a widening budget deficit is added to the already widening CAD, then Turkey's economic and financial stability will be damaged. This was a long digression, I admit. So let's get back to the quality of economic growth. At the moment, the Turkish economy is unable to base its growth on exports for various reasons. Turkish industry isn't competitive enough in terms of costs or technology. Hence, it is quite natural that private consumption, fueled by the liquidity glut, is the main engine of economic growth. But this growth regime excessively hollowed out domestic savings and widened the CAD. At the beginning of the 2000s, the CAD-GDP ratio was about 3 percent. It is over 7 percent now. Moreover, as recent Betam research points out (see my Aug. 30 column, “Turkey on the brink of middle income trap”), labor productivity is almost null. For two years, growth has been driven exclusively by capital stock and employment increases. Babacan is right: Under these circumstances, the Justice and Development Party (AK Party) government should make great efforts to shift the unsustainable growth regime to a more balanced one in which exports, on the demand side, and productivity, on the supply side, play a determining role. These efforts -- in other words, the necessary structural reforms (in education, the labor market, the fiscal system, etc.) -- are well known, and as Babacan pointed out, they are written in “the official documents” (development plans, etc.). But where is the political will -- and the decisiveness?

İşsizlikte artış eğilimi belirginleşiyor

Geçen ayki işgücü piyasası yazıma ‘İşsizlikte artış sinyalleri’ başlığını koymuştum. Temkinli bir başlıktı. Bu kez biraz daha iddialı bir başlığı tercih ettim. Pazartesi açıklanan haziran dönemi (mayıs-haziran-temmuz) işgücü istatistikleri yakından incelendiğinde işsizlikte yavaş ama giderek belirginleşen bir artış eğilimi ortaya çıkıyor. Geçen ayki yazımda da belirttiğim gibi bu aslında beklenen, hatta geç kalmış bir gelişme. Düşen büyümeye rağmen yüksek istihdam artışları işsizliğin genelde yatay seyretmesini sağlıyordu. Son birkaç dönemdir istihdam artışında belirgin bir yavaşlama giderek kendini gösteriyor. Buna karşılık işgücünde güçlü artış devam ediyor.

Yıllık değişimlerin güncel gelişimleri yeterince yansıtmadığını biliyoruz. Yine de dönemler peş peşe izlendiğinde gelişmelerin yönü az çok ortaya çıkıyor. Son bir yıl içinde işsizlik ülke genelinde ve tarım dışında 0.8 puan artarak sırasıyla yüzde 8,8’e ve 11’e yükseldi. Tarımda istihdam son bir yılda 80 bin azaldı. Ama daha önemlisi mevsim etkisinden arındırılmış seriye baktığımızda (Betam, İşgücü Piyasası Görünümü, Eylül 2013) Ekim 2012’den bu yana tarım istihdamının düzenli azaldığı görülüyor. Bu, normal ve sağılıklı bir gelişme. Kısacası, işsizlikle mücadelede tarımdan ‘hayır yok’. Tarım dışı istihdamda yıllık artış 823 bin gibi yüksek bir rakam ama son 10 dönemin en düşük artışı. Ayrıca eğilim düşüş yönünde. Buna karşılık tarım dışı işgücü artışı 1 milyon 115 bin. Bu değişkenin de yıllık artış temposunda yavaşlama var ama artışlar istihdam artışının bir hayli üzerinde. Sonuçta geçen yıla kıyasla işsizler ordusuna 292 bin kişi eklenmiş durumda.

İşgücü piyasasındaki güncel eğilimleri saptayabilmek için mevsim etksinden arındırılmış rakamlara bakmak gerekiyor. Tarım dışı işsizlik oranı krizden sonra en düşük seviyesini yüzde 11,1 ile Haziran 2012’de yakalamıştı. Ardından yükselerek Eylül 2012’de yüzde 11,9 ile zirve yaptı. Şubatta yüzde 11,6’ya kadar geriledi. Şubattan bu yana tarım dışı işsizlik oranı düzenli olarak artarak tekrar yüzde 11,9’a yükseldi. Bu dalgalı seyir önümüzdeki dönemde yeniden bir düşüş yaşanma ihtimalini akla getiriyor. Büyümede de 2. çeyrekte bir hızlanma olduğu malum. Bununla birlikte şahsen işsizlikte artışın devam etme ihtimalini yüksek görüyorum.

Olağanüstü istihdam artışı
Gerekçelerimi bir kez daha hatırlatayım. Yıllık büyüme temposu yüzde 4 civarına yükselse bile tarım dışı istihdam artışının büyümeden sürekli yüksek olması olanaksız. Oysa yaklaşık iki yıldır olan bu. Haziran döneminde tarım dışı istihdam yıllık bazda yüzde 4,3 oranında arttı. Önceki dönemlerde bu oran daha da yüksekti. Emek verimliliği artacağına azalıyor. Bu noktada ‘Türkiye Orta Gelir Tuzağının Eşiğinde’ başlıklı 4 Eylül tarihli yazımı hatırlatmak isterim. Eğer büyümede bir sıçrama olmazsa önümüzdeki aylarda tarım dışı istihdam artışının daha da yavaşlamasını bekliyorum. İşgücü artışları da yavaşlıyor ancak makas kapanmıyor aksine açılma eğilimi gösteriyor. Bu durumda işsizlikte artış devam edecektir.
Geçen ayki yazımda “İşsizlikte artış devam decek olursa seçim maratonunun arefesinde hükümetin artan işsizliğe nasıl tepki vereceği önemli” demiştim. Tekrarlamakta yarar var. Bugüne dek mali disiplinden taviz verilmedi. En son Maliye Bakanı Mehmet Şimşek düşük bütçe açığının mevcut riskler karşısında (artan cari açık kuruyan sermaye girişleri) düşük bütçe açığının önemli bir çapa teşkil ettiğini söyledi. Yerden göğe haklı. Geriye para politikası kalıyor. O da daha fazla gevşetilmeye müsait değil. Seçim maratonu politik iktisat açısından heyecanlı geçeceğe benziyor.

Was the high growth in emerging countries artificial?

I hope readers can recall my column about the middle income trap that Turkey is facing (“Turkey on the brink of middle income trap,” Sept. 2) in which I discussed the astonishing increase of per capita income in US dollar terms in the last decade (from $3,000 to almost $11,000).
I claimed that this performance is not likely to be repeated in the next decade for a simple reason: An important part of this success was due to the impact of the large appreciation of the Turkish lira on the gross domestic product (GDP) in nominal US dollar terms and such an appreciation might not be pursued in the coming years. On the contrary, we are currently witnessing developments in the opposite direction. It is not only Turkey; in all emerging countries running high current account deficits (CAD), local currencies are on the path of depreciation. This is not surprising since these countries also experienced the same kind of astonishing high GDP growth rates in US dollar terms in which local currency appreciations played a crucial role. I had a vague idea about this but a recent article by Ricardo Hausmann from the Harvard Kennedy School (“The End of the Emerging Market Party”) helped provide me with more facts on this issue. Hausmann considered the GDP growth of main developed countries as well as those of some emerging countries from 2003 to 2011 in US dollar terms. Then he evaluated the part played by currency appreciations in the very high growth rates realized in emerging countries. Let's start with the developed countries for the sake of comparison. From 2003 to 2011, GDP increased by 35 percent in the US, 32 percent in Great Britain, 36 percent in Japan and 49 percent in Germany. During the eight-year period, the average nominal growth rate, including the inflation rate, was approximately 4 percent (slightly higher for Germany). Real GDP growth can be estimated to be around 2 percent. A portion of the higher German growth was due to the appreciation of the euro against the US dollar. Now, let's look at growth for some emerging countries during the same period: Brazil, 348 percent; China, 346 percent; Russia, 331 percent; and India, 203 percent. Hausmann adds that the GDP in countries such as Indonesia, Ethiopia, Ukraine, Chile, Colombia and Romania grew more than 200 percent. Needless to say, the per capita income in these countries also increased tremendously in the past decade, as was the case for Turkey. So far so good! Unfortunately, the critical point is that the role played by real growth in these impressive performances is quite modest for some countries. For example, in Brazil, only 12 percent of its nominal US dollar GDP growth was due to growth in real GDP. This means that real GDP increased by only 42 percent during the eight-year period and that the average real GDP growth rate was limited to 4.2 percent a year. The remaining 306 percent increase originated from both increases in prices faster than in the US and the huge appreciation of the Brazilian real. Except for East Asian countries where the contribution of real growth was sizable -- I calculated this contribution to be around one-third for China -- in other emerging countries real GDP growth contributed only about 20 percent on average according to Hausmann. Turkey's performance is rather close to the East Asian performances, except that the nature of its growth was based on domestic demand causing a high CAD. Indeed, nominal GDP in US dollar terms increased by 155 percent in Turkey but only a third of it originated from real growth. Thus, the average real GDP growth rate reached 5.2 percent from 2003 to 2011 in Turkey. Hausmann wrote: “In most countries, the US dollar value of GDP growth handsomely exceeded what would be expected from real growth and a reasonable allowance for the accompanying Balassa-Samuelson effect. [The Balassa-Samuelson effect indicates higher increases, in terms of dollars, of the prices of services in developing countries compared to developed countries. This effect allows an appreciation of the currencies of developing countries of about 1 to 2 percent per year.] The same dynamics that inflated the dollar value of GDP growth in the good years for these countries will now work in the opposite direction.” I agree. Most of the high capita income increases realized in the last decade in the emerging countries with high CAD like Turkey seem to be artificial and no one should be surprised if these increases are reversed in the coming years.

İki farklı büyüme hikâyesi

Dün 2. çeyrek büyüme rakamları açıklandı. Yıllık büyüme (geçen yılın 2. çeyreğine kıyasla) beklenenin üzerinde geldi. Yüzde 3.5 civarında bekleniyordu (Betam’da son tahminimiz yüzde 3,3’tü) yüzde 4,4 çıktı. Takvim etkisinden arındırıldığında yüzde 4,1’e düşüyor. Ancak ardında iki farklı hikâye var. Çeyrekten çeyreğe büyümenin ayrıntılarına girildiğinde (Bkz. Betam, ‘Ekonomik büyümede hızlanma’) büyümenin niteliği değişmese de farklı bir eğilim kendini gösteriyor. Birinci hikâyeden, büyümenin yıllık artışının ardındaki katkılardan başlayalım.

Eski usul büyüme
Yüzde 4,4’lük büyüme her ne kadar geçmişe kıyasla nispeten düşük sayılsa da hükümetin bu yıl için öngördüğü yüzde 4’lük büyümenin üzerinde. Bu, elbette iyi haber. Dahası yüksek istihdam artışını da kısmen açıklıyor. Ancak katkılara baktığımızda tamamen özel tüketime ve kamu harcamalarına dayalı bir büyüme karşımıza çıkıyor. Özel tüketim geçen yıla kıyasla yüzde 5,3 artmış. 4,4’lük büyümenin 3,4 puanı bu kalemden kaynaklanıyor. Kamu harcama artışı çok yüksek: Yüzde 15,5. Katkısı 2,2 puan. Özel yatırımlarda ise geçen yıla kıyasla yüzde 2’lik gerileme var. Stok artışının katkısı (2.3 puan) dikkat çekiyor. Özel yatırımın yarım puanlık negatif katkısını da hesaba kattığınızda iç talep toplamda yüzde 7,4 büyümüş.

Buna karşılık net ihracat büyümeyi 3.1 puan aşağıya çekmiş. Yüzde 1,2 oranında büyüyen mal ve hizmet ihracatının katkısı 0.3 puanla sınırlı kalırken yüzde 11,7 artan itlalat 3.4 puanlık negatif katkı yapmış. Eksi usul büyümeden kastım bu görüntü. İç talebe dayalı, üstelik özel kesim yatırımlarının düştüğü dengesiz ve de kısa soluklu olmaya mahkûm bir büyüme söz konusu. Bu bakımdan cari açıkta gözlemlenen artış şaşırtıcı değil.

Dengesizlik azalmış
Çeyrekten çeyreğe büyümeye gelince, yine esas olarak iç talebe dayalı bir büyüme söz konusu ancak iç talebin bileşimi itibariyle daha farklı bir hikâye ile karşılaşıyoruz. 1. çeyrekten 2. çeyreğe bariz bir dengeleme eğilimi ortaya çıkıyor. TÜİK çeyrekten çeyreğe büyümeyi henüz alt kalemleri itibariyle tahmin etmiyor. Betam bu boşluğu doldurmaya çalışıyor. Burası önemli çünkü yıllık değişim iyi bilenen baz etkisinden mustarip. Diğer ifadeyle geçen 9 aydaki büyümenin etkisini içeriyor. Yanıltıcı olabiliyor. Oysa çeyrekten çeyreğe büyüme ekonomik gidişat hakkında daha güncel bilgi içeriyor.

TÜİK çeyrekten çeyreğe mevsim etkisinden arındırılmış büyümeyi yüzde 2,1 tahmin ediyor. Betam alt kalemlerdeki değişimleri ayrı ayrı tahmin ederek toplulaştırdığında çeyreklik büyümeyi yüzde 1,4 olarak tahmin ediyor. Buradaki fark yüksek gelebilir ama önemli olan büyümenin bileşenlerinin bir önceki çeyreğe kıyasla nasıl hareket ettiği. Özel tüketim 4. çeyrekten 1. çeyreğe yüzde 2,6 artarken bu artış 1. çeyrekten 2. çeyreğe yüzde 0,7’ye düşüyor. Buna karışılk özel yatırımlarda değişim eksi yüzde 0,6’dan artı yüzde 3’e dönüşüyor. Esas can alıcı farklılık kamuda. Bu harcamaların ilk üç ayda yüzde 6,3 arttığını tahmin eden Betam ikinci üç ayda kamu harcamalarının yüzde 0,9 düştüğünü tahmin ediyor. İlk üç ayda stok değişiminin katkısı da belirgin ölçüde daha az. Buna karşılık net ihracatın yaptığı negatif katkı çok daha yüksek; eksi 2.3 puandan eksi 1.2 puana düşüyor.

Özetlersek, tüketiciler, özellikle de kamu 2. çeyrekte frene basmış. Yatırımlarda kıpırdama var. Mal ve hizmet ihracatı ile ithalatı arasındaki makas da dikkate değer ölçüde azalmış. Bu dengeleme eğilimi elbette yeterli değil. Üçüncü, özellikle de dördüncü çeyrekler bu bakımdan büyük önem kazanıyor. Ağustos ayında yaşanan ikinci kur ve faiz şoku bu dengelemeyi devam ettirebilir. Büyüme ivme kaybedebilir ama büyümenin daha az dengesiz olması iyidir.

Global imbalances and emerging countries' troubles

Dilma Rousseff, President of Brazil seems worried at the St. Petersburg G 20 summit Emerging countries, particularly those running high current account deficits (CAD), have been facing a “sudden stop” event since investors reacted to the US Federal Reserve's intention to scale down its quantitative easing (QE) policy by shifting their portfolio preferences in favor of US-dollar-based assets. These capital outflows are causing the depreciation of the local currencies of emerging countries, increasing interest rates and decreasing gross domestic product (GDP) growth rates. This slowdown is considered to be a new threat to the global recovery that remains quite fragile. Countries such India, Brazil, South Africa, Indonesia and Turkey have had their currencies depreciate remarkably in recent weeks, requiring these economies to make harsh adjustments. These ongoing adjustments could prove detrimental to the global recovery if the imports of these countries continue to shrink along with their declining economic growth.
This threat was widely discussed at the recent G-20 summit in St. Petersburg. However, the suggested remedies were essentially limited to recommending moderation to the Fed when it begins tightening its monetary policy. Obviously, moderation by the Fed, even if it occurs, cannot be a solution to the turmoil that emerging countries are suffering. So the question is: Are there other possible responses? Recently, several prominent economists published articles on this topic through the website of Project Syndicate. The most interesting of these articles, at least from my own viewpoint, is one by Daniel Gros entitled “Emerging Markets' Euro Nemesis.” Gros, director of the Center for European Policy Studies, thinks that the true reason behind the troubles in emerging markets will be found somewhere other than over the Fed's QE policy, which has fueled money markets with excessive liquidity, depreciated the US dollar and pulled capital inflows that had caused the appreciation of local currencies and high CADs. According to Daniel Gros, the Fed's policy is only the readily apparent reason, not the root cause. “The real culprit is the euro.” Daniel Gros suggests focusing on external balances. He argues that “quantitative easing in the US cannot have been behind these large swings in global current-account balances, because America's external deficit has not changed significantly in recent years.” Export and import increases in US had a no real impact on external balances, but austerity in Europe had a profound impact. The eurozone's 2008 CAD of $100 billion became a surplus of $300 billion in 2013. The two reasons behind this $400 billon shift are, on the one hand, the austerity raging in south European countries and, on the other hand, the refusal of surplus countries, such as Germany and the Netherlands, to expand their internal demand. Gros wrote: “This extraordinary swing of almost $400 billion in the eurozone's current-account balance did not result from a ‘competitive devaluation'; the euro has remained strong. So the real reason for the eurozone's large external surplus today is that internal demand has been so weak that imports have been practically stagnant over the last five years (the average annual growth rate was a paltry 0.25 percent).” Nowadays, capital withdraws from emerging countries are forcing those countries to adopt their own austerity programs that will tremendously decrease their CAD. At this point, Gros asks the critical question “who will then be able -- and willing -- to run deficits?” According to Gros, the first two of three candidates -- China, Europe and the US -- are committed to running large surpluses. So, if the US does not endorse its role as “consumer of last resort,” global recovery can hardly be pursued. We return, at this point, to the basic problem of global imbalances. Admittedly, China and Germany must absolutely increase their domestic demand so they will be able to increase their imports and decrease their gigantic current account surpluses. I know that this implies difficult maneuvers: The switch in the growth regime from export-led to one of domestic demand must be done without damaging the growth dynamic. This will take time. On the other hand, south European countries should be freed from austerity programs as soon as possible. As noted by the International Monetary Fund (IMF) and reiterated by Kenneth Rogoff in “Are Emerging Markets Submerging?”, published by Project Syndicate, the fund “should place much greater emphasis on debt write-downs and restructuring than it has in the past.” However, the problem is who will pay the bill. Large deficits on the one side and large surpluses on the other allowed the world's economic engine to run well. However, the Great Recession has clearly shown that this state of affairs cannot be pursued vitam aeternam. Unfortunately, we do not know how to bring it back into balance.

Turkey in the global competitiveness index

The World Economic Forum (WEF) published its 2013-2014 Global Competitiveness Index (GCI) this week. Turkey is ranked 44th among 148 countries, though it had been ranked 43rd out of 144 countries in the previous year's GCI.
It is clear that Turkey has essentially stagnated. The answer is simple: Economic reforms have been postponed, and the growth of the gross domestic product (GDP) declined sharply while the macroeconomic environment deteriorated. PM Erdoğan in WEF-Davos The GCI is not just a simple competitiveness indicator as its label implies. Its scope is very comprehensive, encompassing performance measurements of 12 areas -- or “pillars” as WEF calls them. The index is computed on scores estimated according to performance in areas like institutions, infrastructure, macroeconomic environment, health, education, market efficiency, labor and financial markets, technological readiness and innovation, market size and business sophistication. So, the GCI is more than a simple cost-price competitiveness indicator. Rather, it evaluates the welfare state of an economy as well as its potential per capita income growth. Though it is a valuable means for ranking not only a country in the world economy from these two criteria, it also allows for evaluating the strong and weak features of an economy. The overall score of Turkey in the 2013-14 GCI is computed at 4.5. Let me point out that the maximum score is 7, and the score of Switzerland, ranked first, is 5.72. The table below shows the scores of Turkey in each area. These results constitute a fair evaluation of the performance of the Turkish economy in recent years, as well as a strategic roadmap for the structural reforms to be done in the future. Regarding health and primary education -- which is compulsory for all children for at least eight years -- Turkey made considerable progress in the 2000s. The high increase of income per capita and the continued opening of the economy since the 1980s, as well as the diversification of foreign export markets in recent years, increased the overall market size tremendously, which, for the GCI, is considered an important factor in measuring an economy of scales. Macroeconomic stability has not yet been achieved; inflation and the current account deficit are still high, as well as the volatility of both the exchange and growth rates, but the public fiscal stance is in very good shape. The competiveness in good markets is quite acceptable, thanks to the customs union with the EU that introduced the rules and the culture of modern competition, but it is not sufficient nor is it yet at a desired level. Notable investments in infrastructure and the open skies policy have improved transportation, but the WEF says that there are still gridlocks in seaports and the railway network is well backward. In the areas above, more reforms are certainly needed for improvement. But priorities must also be set elsewhere. Regarding two areas, innovation and labor market efficiency, Turkey is absolutely far behind its competitors. Improvement in innovation needs a comprehensive strategy, while the labor market needs radical reforms that aim to introduce more flexibility. Faithful readers of this column will better understand why I am so critical of the rigidities that prevail in the Turkish labor market. Another priority is institutions. Recent arguments in the economic development theory, like those of Daron Acemoğlu and Dani Rodrik, prove that well-functioning political, economic and legal systems; property rights; and a transparent and efficient bureaucracy are necessary for high and sustainable economic growth. The GCI score in this area (4.1) shows clearly that Turkey has a lot of ground to cover. Last but not least, Turkey needs real education reform that makes a jump in the quality of education at the high school and university levels. The number of universities in Turkey is actually close to 200, but the quality leaves much to be desired. That said, the basic question remains the same: Is the Justice and Development Party (AK Party) government politically able to make all those difficult reforms? Strong and weak features of Turkish economy: GCI scores Scores above or equal to overall score of 4.5 Health & Primary Education Market Size Macroeconomic Environment Goods Market Efficiency Infrastructure 5.9 5.3 4.6 4.5 4.5 Scores below overall score of 4.5 Innovation Labor market Efficiency Technological Readiness Institutions Higher Education & Training Financial Market Development Business Sophistication 3.5 3.7 4.1 4.1 4.3 4.4 4.4

'Orta gelir tuzağı'nın eşiğindeyiz

2023 hedefleri giderek uzaklaşıyor

Orta gelir tuzağı son dönemin revaçta kavramlarından. Özetle şunu söylüyor. Ekonomik kalkınmanın ilk aşamalarında yatırımların yüksek getirisiyle tarımdan emek verimliliğinin daha yüksek olduğu tarım dışına geçen işgücü sayesinde kişi başına gelirde yüksek artışlar sağlamak kolay oluyor. Buna karşılık sermaye stoku büyüdükçe verimi düşüyor, tarımdan tarım dışına işgücü transferi de azalıyor. Bu gelişmelerin sonucu olarak da kişi başına gelir artışı yavaşlıyor. Kişi başına gelir artışlarını yüksek düzeyde sürdürebilmek için emek verimliliğinin büyümeye daha fazla katkı sağlaması şart. Aksi takdirde ‘Orta Gelir Tuzağı’ olarak adlandırılan bu aşamadan çıkmak zorlaşıyor. Çıkışın yolu da teknolojik ilerlemeden, işgücünün verimliliğinin artmasından ve ekonominin daha etkin işlemesinden geçiyor.

Türkiye ekonomik kalkınmanın ikinci aşamasına geçmiş durumda. Son on yılda kişi başına gelir hızla arttı. Kabaca 3000 dolardan 11.000 dolara geldik. Bu hızlı artışın ardında ortalama yüzde 6 civarındaki büyüme önemli rol oynadı. Ancak Türk Lirası’ndaki hızlı değerlenmenin de önemli payı var. Ak Parti hükümeti bu performansa güvenerek 2023 yılında kişi başına gelirin 25.000 dolara çıkacağını iddia ediyor. Pek çok iktisatçı gibi bu son derece iddialı hedefi yakalamanın olanaksız olduğu görüşündeyim. Aslında sorulması gereken soru şu: 25.000 dolar bir yana, dolar bazında kişi başına gelir önümüzdeki on yılda 20.000 doları yakalar mı? Şöyle de sorabiliriz: Önümüzdeki on yılda Türkiye orta gelir aşamasından çıkmayı başarabilir mi?

Büyümede üç farklı dönem
Betam’ın 28 Ağustos’ta yayımladığı ‘Türkiye Orta Gelir Tuzağının Eşiğinde’ başlıklı araştırmanın bulguları mevcut gidişat itibariyle bunu başaramayacağımızı söylüyor. Araştırma son sekiz yılın kişi başına gelir artışının basit bir ayrıştırmasını yapıyor. Teknik ayrıntılar için araştırma notuna bakılabilir. Basitleştirirsek, kişi başına GSYH artışını şu üç oranın artışının toplamı olarak ifade edebiliriz: Çalışabilir nüfusun toplam nüfusa oranı, istihdamın çalışabilir nüfusa oranı (istihdam oranı), GSYH’nin çalışan sayısına oranı ya da çalışan başına gelir. Çalışabilir nüfus oranı potansiyel istihdamı, istihdam oranı hane başına ortalama çalışan sayısını, çalışan başına gelir de emek verimliliğini ifade ediyor. Çalışabilir nüfus oranı artışının kişi başına gelir artışına düzenli ama çok marjinnal katkı yaptığını belirtip diğer iki faktöre odaklanalım.
2005’ten 2013’e kişi başına gelir artışı(*) bu açıdan incelendiğinde üç farklı dönem ortaya çıkıyor. Kriz öncesinde kişi başına gelir artışı tümüyle emek verimliliği artışından kaynaklanmış. İstihdam oranı artışı hemen hemen yok. Bunun nedeni tarım istihdamının bu dönemde hızla azalması. Bu sayede istihdamın ortalama verimliliği artıyor. Ama aynı zamanda tarım dışı sektörlerde emek verimliliği de artıyor. Sonuçta kişi başına gelir hızla artıyor. Kriz dönemi konumuz açısından anlamlı olmadığından geçiyorum. Kriz ertesinde 2011 yılının ikinci yarısında bilindiği gibi çok yüksek büyüme, dolayısıyla çok yüksek kişi başına gelir artışı söz konusu. Bu artışa istihdam oranı artışı ile emek verimliliği artışı hemen hemen eşit katkı yapıyorlar. Ancak son iki yılda emek verimliliği artışı duruyor hatta son çeyreklerde negatife dönüyor. Yine bu dönemde büyük ölçüde düşen büyümeyi salt istihdam oranındaki artış taşıyor. Sonuç, düşük büyümeye kıyasla fazlasıyla yüksek istihdam artışı, buna karşılık kişi başına gelir artışında durağanlaşma. Bu manzara tipik bir orta gelir tuzağı manzarısıdır.
* Çeyreklik istihdam serisi 2005’ten başladığından ne yazık ki analiz 2003’ten başlatılamıyor

Turkey on the brink of middle income trap

Turkey has had an astonishing performance with regards to income per capita in the last decade. Indeed, the per capita income has risen from $3,000 to $11,000 under the rule of the Justice and Development Party (AK Party). Encouraged by this performance, the AK Party set very ambitious goals for the next decade, feeling confident that it would be possible to repeat this great performance in the future. Indeed, the AK Party is aiming for per capita income of $25,000 by 2023. I tried to explain several times before in this column that there is little chance of doing so. This time I would like to share with readers further evidence to back my claim.
The Bahçeşehir University Center for Economic and Social Research (BETAM) last week published a research paper titled "Türkiye orta gelir tuzağının eşiğinde" (Turkey on the brink of the middle income trap). As one of the authors of this research, let me explain briefly how the idea for this subject came about. At BETAM we have for years now been closely scrutinizing the Turkish labor market, publishing a monthly “Labor Market Outlook” and a number of occasional research briefs on various labor issues. It was surprising to observe continued high job creation despite the huge decline in the growth rate in the last two years. The factors behind this “happy” event are still not clear. Based on the findings of some preliminary research we suspected that the incentives intending to lower labor costs (such as subsidies for social security premiums) would have contributed to this nice surprise regarding unemployment. But considering the quality of growth as well as the per capita income performance, it was not difficult to predict the existence of some problems, particularly regarding the evolution of labor productivity. Thus, we decided to look more closely at this aspect using a simple decomposition methodology that allows us to break down the per capita income increase into its three contributors: the ratio of the working age population to the total population; the employment ratio (employment /working age population); and labor productivity, defined as the gross domestic product (GDP) per employed individual. The contribution of the working age population ratio is marginal. Though the working age population is still growing more rapidly than the total population, this factor will be extending into the 2020s because of an aging population. As for the two other factors, namely the employment ratio and labor productivity, three different periods are observed. Before the Great Recession in 2009, from 2005 to 2008 high growth was driven almost by labor productivity increases, with the index of labor productivity rising from 100 to 109.6. During this period, total employment almost stagnated, though non-farming employment rose remarkably. Indeed, agricultural employment declined strongly, thus contributing -- via the composition effect -- to the increase of overall labor productivity while labor productivity was also increasing in non-agricultural sectors. In the aftermath of the Great Recession, the nature of growth changed dramatically. From 2009 to 2011, though the Turkish economy had high growth rates, both the increase in the employment ratio and the increase of labor productivity contributed more or less equally to the increase of per capita income. However, since 2012, not only did the growth rate decrease dramatically but the increase in labor productivity first stopped and later started to decrease, as BETAM's research shows. Indeed, the index of labor productivity decreased from 105.8 to 104.8 from the second quarter of 2011 to the first quarter of 2013. Thus, for two years now, under the combined effect of low growth and declining labor productivity, the increase of income per capita is almost stagnating. Obviously, if this poor growth performance continues to prevail, the per capita income of $25,000 targeted for 2023 will never be reached. Moreover, the Turkish economy risks being trapped in the middle-income group of countries since increases in the per capita income will be very slow, if not stagnating. High job creation is certainly good for keeping unemployment in check. Nevertheless, labor productivity must start to increase again in order to continue to increase social welfare. The Turkish economy needs growth rates higher than the current one hovering around 3.5 percent actually. Moreover, this additional growth should come from labor productivity gains.