Turkish economy grows 7.4 percent in first quarter of 2018

[TheMightyBender]

Turkish economy grows 7.4 percent in first quarter of 2018
ISTANBUL

Details to come…

Source: hürriyet daily news

 

[bête noire]

7.4% growth for an economy where per capita is over $11,000 is f***ing impressive! Here we Bangladeshis are very optimistic about our over 7 percent growths for the past few years and future projected years when our per capita stands at only $1700! We should really do some serious reform and strive for 10% and more growth. If a country with huge per capita can grow over 7%, it isn't at all impressive for a lower middle income country like ours to achieve the same.

 

[SouI]

7.4% growth for an economy where per capita is over $11,000 is f***ing impressive! Here we Bangladeshis are very optimistic about our over 7 percent growths for the past few years and future projected years when our per capita stands at only $1700! We should really do some serious reform and strive for 10% and more growth. If a country with huge per capita can grow over 7%, it isn't at all impressive for a lower middle income country like ours to achieve the same.

Well the thing is that our growth is in TL not USD (and I bet yours too as that is how it is calculated. and gdp per capita in usd may actually go down while having high economic growth, like it did for us for recent years.)

And its new USD forecast with this growth is calculated to be around $10.700, so I dont know where you guys get your +$11k from.

And that is the USD forecast with very temporary extremely high interest rates.

So if Erdogan will do what he said he would after the elections, which is the lowering of the interest rates, along with increased US interest rates we could very easily see a 6 to 7 TRY ratio for one USD which in best scenario would mean a GDP per capita of about $7.000.

And I think that is exactly what Erdogan is going to do as with given high debt obligations and unemployment rate we have to have some economic growth.

Extremely bad days are ahead of us.

 

[TheMightyBender]

Well the thing is that our growth is in TL not USD (and I bet yours too as that is how it is calculated. and gdp per capita in usd may actually go down while having high economic growth, like it did for us for recent years.)

And its new USD forecast with this growth is calculated to be around $10.700, so I dont know where you guys get your +$11k from.

And that is the USD forecast with very temporary extremely high interest rates.

So if Erdogan will do what he said he would after the elections, which is the lowering of the interest rates, along with increased US interest rates we could very easily see a 6 to 7 TRY ratio for one USD which in best scenario would mean a GDP per capita of about $7.000.

And I think that is exactly what Erdogan is going to do as with given high debt obligations and unemployment rate we have to have some economic growth.

Extremely bad days are ahead of us.

I am sorry but I dont think you understand how the economy works at the slightest.

 

[SouI]

I am sorry but I dont think you understand how the economy works at the slightest.

So you have actually any argument to share or are you just empty talk with hot air?

Come on dont just stand there shy like that, come here and refute my points with statistics and formulas!

 

[bête noire]

And its new USD forecast with this growth is calculated to be around $10.700, so I dont know where you guys get your +$11k from.

I got it from IMF - http://www.imf.org/external/pubs/ft...ntry&ds=.&br=1&c=186&s=NGDPD,NGDPDPC&grp=0&a=

Where did you get $10,700 from?

Well the thing is that our growth is in TL not USD (and I bet yours too as that is how it is calculated. and gdp per capita in usd may actually go down while having high economic growth, like it did for us for recent years.)

Our growth is in nominal terms also the per capita growth in nominal terms which is market exchange rate of USD, you can calculate year by year to see it. Yours seem to be that too.

So if Erdogan will do what he said he would after the elections, which is the lowering of the interest rates, along with increased US interest rates we could very easily see a 6 to 7 TRY ratio for one USD which in best scenario would mean a GDP per capita of about $7.000.

I am not an economic expert but IMF projection says your's will only increase in nominal terms. If you're talking about purchasing power then that's different but generally speaking according to IMF you economy is going to increase a lot year by year. Also this report from IMF is very recent, April 19 publication of this year.

 

[SouI]

got it from IMF - http://www.imf.org/external/pubs/ft...ntry&ds=.&br=1&c=186&s=NGDPD,NGDPDPC&grp=0&a=

Where did you get $10,700 from?

From here, a source from a pro-AKP and the biggest turkish news company about this 7.4% growth rate: http://www.hurriyet.com.tr/ekonomi/son-dakika-merakla-beklenen-buyume-rakami-aciklandi-40863872

"Kişi başı milli gelir ise 10 bin 782 dolara yükseldi. 2017 yıl sonunda kişi başı milli gelir 10 bin 597 dolardı. (Hesaplama TÜİK'in 2018 nüfus projeksiyonuna göre yapılmıştır.)"

Direct translation:
"Per capita income has rised to 10 thousand 782 dollar. At the end of 2017 per capita national income was 10 thousand 597 dollar. (The calculation has been done according to the 2018 population projection of TUIK.)"

So no +11k and nowhere near 7.4% increase in nominal gdp per capita (from 10.597 to 10.782).

Our growth is in nominal terms also the per capita growth in nominal terms which is market exchange rate of USD, you can calculate year by year to see it. Yours seem to be that too.

Soo lets see.. Our nominal gdp per capita:

This is from TUIK, the official government statistic agency that calculates all kinds of economic stats.

As you see the gdp per capita has been going down for the recent years as I had said before.

Now lets look at the real growth rates:

The furthest down you can see the GDP infos, again from originally the TUIK where every news agency and even the ministries get their infos from.

The far left you see the years over each other. The columns O P Q R stand for Q1 Q2 Q3 Q4 quarters of their years respectively and the S column means the yearly average.

Now please kindly compare the nominal gdp per capitas and the real growth rates.

Exactly.

Also this report from IMF is very recent, April 19 publication of this year.

These reports from TUIK is even more recent, from today!

And even IMF gets its infos that it uses to calculate gdp etc from TUIK.

 

[bête noire]

So no +11k and nowhere near 7.4% increase in nominal gdp per capita (from 10.597 to 10.782).

You have misunderstanding of how the increase is calculated. the 7.4% increase is in the nominal total economy in in $ term, not per capita.

For example, Bangladesh last year had a growth of 7.3% in economy but per capita growth was 6%. It's because per capita takes into account population growth. We have population growing by around 1% each year reducing our per capita growth to 6% instead of 7%.

For Pakistan's case the population growth was over 2% so instead of growing at 5.6%, their per capita grew only 3%. So you need to take into account population change for per capita growth.

For economic growth, just calculate previous year to this years economy size accounting for dollar inflation to find out the economic growth. For per capita growth, divide the current economic size by current population size and previous year economic size by previous year population size and then calculate the increase.

 

[Inspector Spacetime]

From here, a source from a pro-AKP and the biggest turkish news company about this 7.4% growth rate: http://www.hurriyet.com.tr/ekonomi/son-dakika-merakla-beklenen-buyume-rakami-aciklandi-40863872

"Kişi başı milli gelir ise 10 bin 782 dolara yükseldi. 2017 yıl sonunda kişi başı milli gelir 10 bin 597 dolardı. (Hesaplama TÜİK'in 2018 nüfus projeksiyonuna göre yapılmıştır.)"

Direct translation:
"Per capita income has rised to 10 thousand 782 dollar. At the end of 2017 per capita national income was 10 thousand 597 dollar. (The calculation has been done according to the 2018 population projection of TUIK.)"

So no +11k and nowhere near 7.4% increase in nominal gdp per capita (from 10.597 to 10.782).



Soo lets see.. Our nominal gdp per capita:

This is from TUIK, the official government statistic agency that calculates all kinds of economic stats.

As you see the gdp per capita has been going down for the recent years as I had said before.

Now lets look at the real growth rates:

The furthest down you can see the GDP infos, again from originally the TUIK where every news agency and even the ministries get their infos from.

The far left you see the years over each other. The columns O P Q R stand for Q1 Q2 Q3 Q4 quarters of their years respectively and the S column means the yearly average.

Now please kindly compare the nominal gdp per capitas and the real growth rates.

Exactly.


These reports from TUIK is even more recent, from today!

And even IMF gets its infos that it uses to calculate gdp etc from TUIK.

Hurriyet/CNN Turk etc isn't a pro-AKP news-outlet, they are neutral with a sway towards anti-AKP. But anyway.

You are talking about 'orta gelir tuzagi/middle income trap'. This is a problem that all upcoming economies face. It can keep a country at the middle income for decades or it can even lead to a country falling back to a lower income category. Countries similar to ours like Brazil have been dealing with this issue for way longer than us.
According to this wikipedia page: https://en.wikipedia.org/wiki/Middle_income_trap, middle income is between 1000 and 12.000 dollars. And according to the chart you posted, we had broken through the 12.000 barrier in 2013 and 2014, but was unable to sustain it.

Erdogan is also aware of this problem and occasionally talks about it. If I remember correctly, the first time I heard the term 'orta gelir tuzagi' was from Erdogan, and this was a long while ago. He and other ministers still talk about this when the subject calls for it.
http://www.businessht.com.tr/piyasalar/haber/1748409-erdogandan-orta-gelir-tuzagi-formulu

You also said that Erdogan was going to lower interest rates, that would cause TRY to go to 6 or 7. I don't agree with that. He and AKP want to lower interest rates sure, but they don't support the lowering of these rates willy nilly. Otherwise they would've pressured the central bank to bring the interest rates to 0 or 1% or whatever in the 16 years they have been governing. (The Central banks long term target is 4% interest by the way)

Matter of fact, the recent interest hikes was supported by Mehmet Simsek of the AKP government saying:
"Şimşek, “Merkez Bankası para politikasında güçlü tepki verdi, vermeye devam edecek. Merkez Bankası’nın spekülatif saldırılara eli kolu bağlı değildir. Hükümetin tam desteğine sahiptir. TCMB ne gerekiyorsa yapacaktır” dedi." Translation: "The Central Bank has responded strongly to the monetary policy, will continue to give. The Central Bank's not tied to the elbow against speculative attack's . It has full government support. The CBRT will do what is necessary, "he said."

The Turkish central bank has been doing pretty good when it comes to it's policy. With that I mean is they aren't systematically messing up, they make occasional mistakes sure. Like for instance back in 2016, it should've raised interest rates back then. If they had done that, we wouldn't have been in this situation (TRY and inflation).

 

[SouI]

You have misunderstanding of how the increase is calculated. the 7.4% increase is in the nominal total economy in in $ term, not per capita.

For example, Bangladesh last year had a growth of 7.3% in economy but per capita growth was 6%. It's because per capita takes into account population growth. We have population growing by around 1% each year reducing our per capita growth to 6% instead of 7%.

For Pakistan's case the population growth was over 2% so instead of growing at 5.6%, their per capita grew only 3%. So you need to take into account population change for per capita growth.

I had thought of you failing to understand the situation due to the population increase, but then I had decided to not get into that issue, I had dismissed it because I thought you were smarter than that as the official mid-term population numbers are also openly stated in english in my screenshot.

You should have been able to very easily tell that the the population increase there (about 1.26%) could not possibly lead to a -2.6% reduction in nominal gdp per capita when the economy has grown by 7.4%.

I mean, isnt that PRETTY OBVIOUS, even without doing any calculation, that it is just impossible?

Doing the simple math (107.4÷97.6=110!!!) easily shows that you need 10% increase in population in that year to have -2.4% reduction in GDP per capita when the economy grows by 7.4% !!! I mean it was obvious to the naked eye that it would need about 10% population increase.. even without doing any calculation....

And apparently you didnt even look into the data properly yet alone researched extra data yourself. In the data up there there is a reduction in nominal per capita by "9%" in 2015! And now go check the growth rate and then try to imagine the rate population must have increased to support your claim that these growth rates are calculated based on nominal USD!!

God I am ashamed that I even had to explain these "too obvious" facts..

 

[bête noire]

I had thought of you failing to understand the situation due to the population increase, but then I had decided to not get into that issue, I had dismissed it because I thought you were smarter than that as the official mid-term population numbers are also openly stated in english in my screenshot.

You should have been able to very easily tell that the the population increase there (about 1.26%) could not possibly lead to a -2.6% reduction in nominal gdp per capita when the economy has grown by 7.4%.

I mean, isnt that PRETTY OBVIOUS, even without doing any calculation, that it is just impossible?

Doing the simple math (107.4÷97.6=110!!!) easily shows that you need 10% increase in population in that year to have -2.4% reduction in GDP per capita when the economy grows by 7.4% !!! I mean it was obvious to the naked eye that it would need about 10% population increase.. even without doing any calculation....

And apparently you didnt even look into the data properly yet alone researched extra data yourself. In the data up there there is a reduction in nominal per capita by "9%" in 2015! And now go check the growth rate and then try to imagine the rate population must have increased to support your claim that these growth rates are calculated based on nominal USD!!

God I am ashamed that I even had to explain these "too obvious" facts..

didn't read it properly, didn't have time to. I started quoting then had to leave and coming back after a long while I simply started writing reply from where left off instead of properly reading again

On the note of data though, IMF data supports the TUIK data and shows the economy reduction in 2017 and meagre increase in 2016.

http://www.imf.org/external/pubs/ft...sort=country&ds=.&br=1&c=186&s=NGDPD&grp=0&a=

They however have pretty high growth for future projection. Guessing all that will be hot air once the time comes. They also predicted high growth in in their past reports for 2017. So if history is anything to go by, the projection aren't as reliable for Turkey.

 

[SouI]

Hurriyet/CNN Turk etc isn't a pro-AKP news-outlet, they are neutral with a sway towards anti-AKP. But anyway.

Demirören.

You are talking about 'orta gelir tuzagi/middle income trap'. This is a problem that all upcoming economies face. It can keep a country at the middle income for decades or it can even lead to a country falling back to a lower income category. Countries similar to ours like Brazil have been dealing with this issue for way longer than us.
According to this wikipedia page: https://en.wikipedia.org/wiki/Middle_income_trap, middle income is between 1000 and 12.000 dollars. And according to the chart you posted, we had broken through the 12.000 barrier in 2013 and 2014, but was unable to sustain it.

Erdogan is also aware of this problem and occasionally talks about it. If I remember correctly, the first time I heard the term 'orta gelir tuzagi' was from Erdogan, and this was a long while ago. He and other ministers still talk about this when the subject calls for it.
http://www.businessht.com.tr/piyasalar/haber/1748409-erdogandan-orta-gelir-tuzagi-formulu

No I was not talking about the middle income trap, and dont you worry I know very well what it is and also that we have been in that trap for a long time now.

Geez I know all that!! But they are off-topic here!!

I was just responding Ashik's claim that growth rates are calculated based on USD, which is not true at all. They are based on local currency. And calculating it is also pretty simple! ( ("current gdp in local currency" - "gdp in local currency in previous year") ÷ "gdp in local currency in previous year" - "inflation rate" )

I was just busy proving this simple fact.

Matter of fact, the recent interest hikes was supported by Mehmet Simsek of the AKP government saying:
"Şimşek, “Merkez Bankası para politikasında güçlü tepki verdi, vermeye devam edecek. Merkez Bankası’nın spekülatif saldırılara eli kolu bağlı değildir. Hükümetin tam desteğine sahiptir. TCMB ne gerekiyorsa yapacaktır” dedi." Translation: "The Central Bank has responded strongly to the monetary policy, will continue to give. The Central Bank's not tied to the elbow against speculative attack's . It has full government support. The CBRT will do what is necessary, "he said."

Dont worry I know all the speeches he or other imporrant people make. I follow them closely every day, so dont you worry on the possibility that I might have missed some of them.

But, again, they are irrelevant to the subject we are having here.

Nowhere I even implied government may be having problems with the central bank nor central bank's independence may be conflicted nor that the government was not giving political support to the central bank.

The Turkish central bank has been doing pretty good when it comes to it's policy. With that I mean is they aren't systematically messing up, they make occasional mistakes sure. Like for instance back in 2016, it should've raised interest rates back then. If they had done that, we wouldn't have been in
this situation (TRY and inflation).

I never even implied that the central bank may make a mistake in the future or that I had doubts about its actions. That wasnt the subject here.



It is just my own humble opinion that central bank will have to lower interest rates (current interest rates are far too high for the unemployment rate we have today along with the projections that we may have a "negative growth" in the third quarter, or hell even in the fourth quarter like this!!!)

With the debt obligations the government and the companies have, "they need economic growth".

With the pace we have now we may even get into a bloody "stagflation", and that would really be our economy's death certificate given our debt obligations!