This year it will be hard to reach the 4 pct growth of 2013
The growth figures of 2013, together with election results, were announced March 31. The growth rate in the last quarter of the year was 4.4 percent, a little over expectations and the growth of 2013 was announced as 4 percent.
It is observed that it has been the domestic demand that was influential in the growth in the last quarter of 2013. While it was seen that the increase in household and public consumption expenditures accelerated in the last three months of the year, it was observed that private sector investments also rose and made significant contributions to growth in the second half of 2013.
The growth rate which was 8.8 percent in 2011 fell down to 2.1 percent in 2012. After 2.1, the 4 percent growth rate caught in 2013 should be considered as a positive rate. This year, even though the previous year’s, in other words, the 4 percent rate is being targeted, it looks quite difficult to reach this rate. In my opinion, it should also be considered a significant success that the 4 percent rate was reached in 2013.
The reason for this is that the global conjuncture has now started causing a decreasing course in growth rates in developing economies like us. When we look at the preliminary indicators that would affect growth in the first three months of this year, we can say this course in decline has already started. In the first three months of this year, particularly the preliminary data on domestic demand show there will not be a vivid domestic demand as of last year. However, we can say that instead of this, the data of the first months are giving positive signals that foreign demand, in other words, increase in exports will be filling for this. It is not certain what the increase in foreign demand would be after this, but it is obvious that it would be difficult for it to completely fill the vacuum created by the domestic demand.
If domestic demand is increased because of elections
The consumer confidence index of the first two months of 2014 and data such as automobile and appliance sales show domestic demand has weakened. Alongside this, a 15 percent drop in credit cards and 10 percent fall in consumer credit has been experienced. While a fall has also been observed in capacity usage rates, exports have increased 7.2 percent in the first two months and imports have decreased 1.7 percent.
Despite this increase in exports, because of the shrinking in domestic demand, it looks inevitable that growth rates will fall this year. However, it is difficult to estimate how much it will fall because we are not in a normal period. Because it is election time, there is an uncertainty whether or not the government will boost domestic demands.
Meanwhile, one of the first topics debated as soon as the elections were over has been the question whether or not general elections, normally to be held in 2015, would be rescheduled to be held this year. It is also being debated that if they are rescheduled, would they be held in August together with the presidential elections, or will they be held in November.
This decision, in my opinion, concerns very closely the growth rates of this year. If the general elections are rescheduled for this year, it could be possible that the government might take decisions to boost the domestic demand to increase its votes, in other words, make a serious increase in public spending.
This decision would negatively affect the economic equilibriums, but it would be possible for growth rates to catch at least the 4 percent of 2013.