A footballer’s take on the economy
The Turkish economy is doing well. There is a tiny bit of volatility in the exchange rate. I believe that interest rates need to fall. Investors and entrepreneurs are doing well. And they should so that shopkeepers can continue to earn money.
Obviously, these are not my remarks. They belong to Turkish footballer Arda Turan, who shared President Recep Tayyip Erdoğan’s views on the Turkish economy with the Hürriyet Daily News’ big brother, Hürriyet, on March 25. I am not angry with Arda for poking his nose into my domain. After all, 99.99 percent of Turks, including your friendly neighborhood economist, discuss football every day. So he has every right to speak on economics – as well as anything else – as often as he likes.
Neither am I belittling him for getting basic economic facts wrong. I shared my views on interest rates several times during the last few weeks. And I would not call the most recent exchange rate volatility “tiny bit.” However, Arda is implicitly aware of the interdependence of different sectors of the economy, which would make him more knowledgeable in the dismal science than Erdoğan’s economic advisers.
But I feel I should correct one of his remarks: The Turkish economy is not doing well at all, as confirmed by the latest data. For example, March consumer and real sector confidence indices, which were released on March 23 and 25 respectively, plunged. The fall in consumer confidence was especially notable, as the index hit a six-year low.
Interestingly enough, some economists played down the dive in consumer confidence, noting that the index reacts to the lira-dollar exchange rate. There is indeed a correlation, but it is not as strong as many claim. Even though the government’s spin-doctors in pro-government “newspapers,” who are masquerading as journalists or columnists, would have you believe otherwise, both the lira weakness/volatility and the fall in confidence indices have their roots in politics.
After burying the hatchet with the Central Bank, Erdoğan attacked his own government over the peace process. While these may seem like unrelated events, I see both as part of his attempts to secure a win strong enough to change the constitution in the June elections. Having realized that forcing the Bank to sharply lower policy rates would have caused a currency crisis, he is probably now going after nationalist votes by objecting to the negotiations he himself had brought to life.
What he doesn’t realize is that his actions have resulted in a confidence crisis that has literally brought investment and consumption to a full stop. And just like lower rates, pork barrel spending, signs of which were seen in the February budget data released on March 16, will not help, either. After all, as Arda implied as well, without reviving production and investment, it is impossible to resuscitate consumption and employment.
Maybe Erdoğan should appoint Arda as his economic adviser, or at least make him an economics columnist in one of the pro-government “newspapers.” He surely would not have done a worse job than those holding these posts at the moment.