Turkey's economic policy perspective


Earlier this month, the government announced the new medium-term economic program to be followed from 2017 to 2019. Indeed, given that they assume hardly any dynamic targets based on the existing situation, official texts like medium-term programs are orthodox most of the time. There are no huge differences between medium-term program objectives and the International Monetary Fund's (IMF) projections about Turkey. In other words, we are once again facing an unassertive medium-term program that is plain enough to need no further explanation. This is the logic behind the governments' announcement of medium-term programs.

All medium-term programs set objectives that are "in sight," vowing that they will accommodate themselves to circumstances. We are once again facing a text of this kind. As such, I think that the announced medium-term program has hardly any controversial aspects. As required by the abovementioned logic, such programs certainly have internal mathematical consistency. In other words, growth, current account deficit, budget, inflation and unemployment figures must achieve a mathematical consistency that does not contradict each other. This is not a hard task to be written on paper, but like a simple homework assignment that might take one or two hours for a math or economics student that has command of set up models.

Nevertheless, Turkey's new medium-term program is different from common medium-term programs that are reminiscent of homework. It projects that Turkey will meet a new growth perspective as of 2017 and reach greater growth pace than the current one.

More or less, all developing countries' medium-term programs correspond to the assessments cited in the IMF's global economic outlook reports. In other words, assumptions that governments and IMF analysts use as a base are almost the same. Well, what happens if you change your assumptions? This means you will pursue a path that is different from the world's general economic situation and course. Such a perspective might be criticized for two reasons: First, as your assumptions are not realistic, your objectives will not come true. Second, your assumptions tell everybody that you will pursue a path that is different from the one that has so far been imposed on you. The second one not only arouses economic criticism, but also confronts you as a political question either directly or indirectly. In the medium-term program, Turkey takes the existing national, regional and global circumstances as a basis and accepts them; however, it highlights a perspective that will turn these circumstances into something positive as of 2017 and enable it to positively differ from the world. This means Turkey will rapidly carry out economic reforms and further improve the investment environment during the state of emergency.

In fact, this is a paradigm shift for Turkey in two main areas. First is an important change in Turkey's foreign policy and understanding of strategic partnership. Second is a new and unique economic policy path that is not stuck in poor medium-term programs and impositions by credit rating agencies.

I would not say that Turkey must follow a path that is completely different from the outside world and that does not properly understand the existing situation. I would simply say that countries like Turkey should not do something different from what the U.K. is doing these days. I mentioned what British Prime Minister Theresa May's recent speech about the Brexit strategy signified in my column. Following this speech, the British pound has started falling rapidly against the dollar and euro - which is the first main step of May's statement that the U.K. will be more active in foreign markets and British companies will be given more facilities to access markets. The U.K. will accelerate the Brexit process and try to build it in accordance with its competition with the U.S. and EU, which leads to a new understanding of economic and political sovereignty. So, we will see significant changes in the economic policies that the U.K. has tried to develop since the early 1980s.

In addition to the U.S., U.K. and EU, we will also see China and the Asia-Pacific in the competition over energy and market places. Such a relentless competitive environment that tries to overcome the current economic crisis and turn it in its own favor inevitably witnesses civil wars, regional wars and surprising political changes. This being the case, just as the U.K. does for the sake of its national interests, Turkey will inevitably make major changes in its foreign policy and economic policy fundamentals starting with EU relations.

Turkey has already begun taking steps to this end. Even the recently founded Sovereign Welfare Fund (SWF) is an achievement that cannot be understood and gained through traditional monetary and financial policies and the relevant logic of privatization. A policy of inclusive foreign competition and high tech-based growth is possible with a new and more efficient financial policy that creates externality and covers major infrastructure investments. To conclude, Turkey is stepping into a new period where markets will operate more actively in a more open and improved investment environment and where financial markets will work in a more efficient and healthier way.

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