With the deadly events unfolding in Ukraine, now is not the time to dwell on GDP growth numbers. More is the shame for Turkish officials who on February 28 rolled out 11% for 2021, the better performances seen in a decade. Stop there, of course, because we add the usual caveat: this is the official growth number, because given by this highly disputed equipment, the Turkish Statistical Institute (TUIK or TurkStat). It has been several years now that a handful of analysts began to question the methodologies of the dear TUIK, and the answers sought are not yet there.
But whatever! Let’s play dumb, assume everything is as it should be and align ourselves with Turkish Finance Minister Nurettin Nebati to determine with pleasure that 11% is the best growth performance for 2021 found in the G-20, EU and OECD universes (might Mr Nebati be familiar with across the universe by the Beatles? We would like to invite him to sing the chorus).
Are you feeling joyful? Call them baseless inferences whether you want to or not, but to fortify your journey with Turkey’s impressive growth data, you can go here, here, here and here. I have guru deva, om.
But seriously. If you use macroeconomic statistics in real life, avoid planning or pricing based on TUIK data.
On our tip sheet, we wrote down a plump 15% expectation for the Turkish official GDP growth for 2021. Erdogan’s regime, alas, did not have the audacity to publish it, perhaps constrained by the less than stellar numbers published by his peers.
To be bolder, you can believe veteran regime watchers that Turkey’s economic activity actually bears no relation to the official growth figure. As it stands, mainstream forecasters are writing 3-3.5% for the 2022 growth release. advance. For 2021, they started in the 4-5% and ended in the 10%.
For 2022, the minimum expectation for the Erdogan administration hovers around 5%, as usual. The “public auctions” will continue until March 2023, when the 2022 figure will be released. Provided that Erdogan remains seated on the throne.
As for the pesky reality, monetary conditions become tighter in Turkey from December 20. Much economic activity has come to a virtual standstill.
Europe (take ‘Europe’ as ‘Turkey’s exports’) has also suffered a slowdown so far this year. Tightening pressure in the face of soaring inflation is now also haunting Europe.
Erdogan’s leadership, for its part, is pursuing the only economic policy it knows: the pumping of credit. Under current conditions, this will be useless. It will simply fuel the exchange rate and, therefore, hyperinflation.
Ever since Putin’s regime rocked global markets by launching a full-scale invasion of Ukraine on Feb. 24, Erdogan officials have struggled to keep the USD/TO TRY pair below level 14.
The impacts of “geopolitical tensions” on financial markets are generally short-lived. Under normal conditions, to produce another shock in the markets, a game changer, such as a Russian attack outside of Ukraine or real law enforcement being imposed on Russia (perhaps no gas exports or oil, or absolutely no access to SWIFT in the world payments system) would be required.
However, don’t bet the farm on what is needed. The invasion of Ukraine already takes us into uncharted territory in a global environment that has been in uncharted territory since the start of 2020.
Further tightening will be essential in the coming days. If there were no war to report, the real reason, namely the upcoming Fed tightening, would be on the table. And quite crudely.
Wars are good for the system since they help divert the attention of the working masses. Fear is a basic instinct of the living organism. It is an indispensable tool for gathering workers. As the global system struggles, loses its moorings, fear rains down in the form of pandemics, wars and more, which is on the way.
In January, Turkey’s trade deficit exploded. It will remain high in February and March. The government has again been circulating potential “tourism revenue” as the great cure for Turkey’s ills.
Every year, the same stories circulate at the same time. The problem is that the government finds itself believing its own misguided stories.
Until 2018, the Erdogan regime has succeeded in all its big bets. Since this year, he has lost them all.
On the global front, tension is mounting over the next monetary tightening. Moreover, the war sought by the global system was served by the Putin regime on a silver platter in Ukraine.
It is too early to draw conclusions because the evolution of this war enterprise is still unknown.
At the moment there is a war (not a confrontation, a military operation or anything else, but a real war of state against state) in Ukraine and it is a war under the attention global media, which means a lot of “noise” and manipulation.
It’s a cliché, but the reality is that the first casualty of war is the truth. So it’s time to avoid jumping on all the information presented by the media.
It’s also time for media mongers to make hay, releasing sensational titles with lots of “may”, “could” and “might”. For example: “Turkey’s economy could feel the heat with the Russian offensive.”
A few months ago it was Afghanistan. Currently, one would think that no woman or child is suffering in Afghanistan.
We will see how long the media attention on Ukraine lasts before our ultra-humanistic, ultra-sensitive newsrooms turn a blind eye to the people suffering from the Russian invasion.
February 24 was a real shock. A limited invasion was expected in the Donbas region (the southeastern red region below) but the Russians are currently invading all of eastern Ukraine. (See live map here.)
Red denotes the Russian Armed Forces. In Georgia, Russia invaded Abkhazia and South Ossetia in 2008. The Ukrainians seem intent on defending themselves west of the black line, while waging guerrilla warfare in the east.
However, even though this conflict has already gone far beyond expectations, it is still a regional clash. World War III will not break out in Ukraine. That would be extremely stupid because the Biden administration has failed even to do its real job, a job called China.
Rather than expending their energy on a global war in Europe, the various protagonists can go straight to Beijing and crown Xi Jinping the new global hegemon.
Overpopulated China has posed the greatest threat to the Russian empire throughout history, even though the global media likes to portray Russia and China as allies. Rather, the Russian Empire was an ally of the United States in the first two world wars.
The United States, with the United Kingdom on the bandwagon, controls the English-dominated global media. Thus, the media sleeps with Ukraine and wakes up with Ukraine.
Worrying the common man with the Russian bogeyman is actually stale fodder, but a real war on the doorstep will suffice for now to quell the discontent. Otherwise, it would be time to redistribute some of the wealth and economic surpluses.
Putin will aim for a fait accompli as happened in Chechnya (2000), Georgia (2008) and Crimea (2014). There will be hoo-ha in the media (useful for western states) but nothing else.
Since February 28, Ukraine has resisted. If it lasts much longer, Putin will be in trouble.
The Russian establishment never reads the fable of “The Frog and the beef.” Then, they degenerate into intra-state clashes (cf. 1989 or 1917).