The locomotive of growth: Digitalization

Published 22.04.2017 01:57

Since the morning of April 17, we have set sail to a new point-of-view based on the cooperation of public and private sectors in the economy and the change in the political decision-making process to strengthen Turkey's position in global competition

Turkish economy circles have rapidly started evaluating processes to accelerate the wheels of the economy with the end of the April 16 referendum process and political stability brought by resolution.

Since the morning of April 17, while the agenda is followed to adjust laws and reforms required by the 18 article amendment package voted for by the people, steps to enhance the positive effect of packages the government realized to support the real sector and markets will be fast tracked.

In this regard, short-term, medium-term and long-term steps are quickly evaluated, along with the stimulant effect of a fund of close to TL 130 billion ($35 billion) for the goods and services market provided to the real sector, following the restructuring of the Turkish Credit Guarantee Fund.

For 2017, measures to stimulate the private sector and to expedite the contribution of net export to growth are a top priority on the agenda. In addition, recuperative steps for the incentive packages are discussed and efforts to strengthen Turkish Eximbank and enable exporters to benefit from offers by the Credit Guarantee Fund will intensify.

Basically, the change of perception introduced by the amendments package's presidential government system and the legislation for critically important sectors of the economy pave the way for a process where regulations will be quickly reviewed.

According to principles of "good governance," since the morning of April 17, we have set sail to a new point-of-view based on the cooperation of public and private sectors in the economy and the change in the political decision-making process to strengthen Turkey's position in global competition. The transformation of perception and change of models in governance and business all go through the process of "digitalization."

In Turkey, especially for small and medium sized enterprises (SMEs), digitalization is barely 5 percent. The reform period sped up by the presidential government system will accelerate Turkey's digital transformation. By 2023, 60 percent of its SMEs will be fully digitalized, increasing added value of exports from $1.5 to $3. April 17 will be the milestone for digitalization.

Cautious optimism from the IMFWith regard to the International Monetary Fund-World Bank (IMF-WB) spring meetings, the IMF's latest report on the World Economic Outlook, "Gaining Momentum?" pointed to conjectural recovery in industry and trade in the world and the possibility of acceleration due to optimistic financial markets, while global growth expectation for 2017 was revised from 3.4 percent to 3.5 percent.

IMF economists kept the global growth expectation for 2018 constant at 3.6 percent. The report, stating the global economy can still face downward risks in the medium term, emphasized that inward-oriented policies, low efficiency and inequality in income distribution threaten global integration.

This implies that while the IMF identifies today's risks and the future of the global economy, it does not present any clear or enlightening solutions for these problems. This must be confusing with regard to policy the U.S. Federal Reserve System might follow in 2017: Due to rising interest rates and a tight monetary policy, fragile economies could be adversely affected by the rapid rise of the dollar or with the Fed following a looser policy and a diminishing of financial regulations; this could encourage global investors to take high risks, thus increasing the chances of having financial crises in the future.

Regional tensions, international political conflicts, terror and extreme weather conditions were other downward facing risks. In the report where IMF economists recommend implementation of structural reforms and financial measures to increase efficiency, labor supply, and investments, it indicates trustable strategies are urgently needed to make public debt sustainable.

Even though the IMF revealed a "homework" list for countries, the fact that it did not present tangible recommendations or materialize the list, only making observations, an attitude towards solutions, it is surprising to see the expectation that the 70-year-old institutions can produce more constructive studies has not been fulfilled.

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