TURKEY WILL FOLLOW THE FOOTSTEPS OF USA IN ECONOMY

The economists, who claim that the USA is the heart of world economy, stated that Turkey should follow a path similar to the USA policies, which as a result would cause interest rates to increase and slow down the growth.  Prof. Dr. Hakan Yetkiner, Lecturer at Izmir University of Economics-Department of Economics, pointed out that the biggest danger for Turkey’s economy was the US Federal Reserve increasing the interests and decreasing the liquidity. Prof. Dr. Yetkiner, made assessments about Turkish economy for the second half of 2013, and indicated that the country would follow a policy that would match that of USA’s.  

Prof. Dr. Yetkiner also indicated that the USA was the heart of world economy, and world economies would take this country as basis for their economies. He reminded the fact that Prof. Ben Bernanke’s, Chairman of the USA Federal Reserve, announcement about the possibility of giving up strategy of increasing  money supply in 2014 created a turbulence in world markets. Prof. Dr. Yetkiner said, “The world markets experienced a total turbulence after the statements by Prof. Bernanke. Prof. Bernanke had to make a restatement that it was not a final decision yet. But, the USA is the heart of world economy. Increase of interests and decrease of liquidity in USA would promote the return of footloose capital back to the USA.   In this case there are two things to be done by countries with rare capitals such as Turkey. Either allowing the escape of capital or increasing the interests in parallel to USA and keeping the capital within the country.”

 
Interest rates will increase, growth will slow down

 
Prof. Dr. Yetkiner stated that in the case of allowing capital funds to exit, the rates would increase, there would be depreciation, importing would become more expensive, and indispensable products such as crude oil would cause inflation in the country which would not be a desirable solution. Prof. Dr. Yetkiner stated the following:

“Turkey would increase the interests in parallel to USA and keep the capital within the country. This will cause interests to increase, and consumption and investments will decrease. Economic growth will slow down. Public and private institutions in debt may have to deal with heavy burden of interest. Turkish Central Bank already gave the signal for this by increasing the upper band of interest rate corridor by 75 points. However, it looks as though the markets are not satisfied with this decision of the Central Bank. Therefore, the currency exchanges still maintain their instability. In that case, we will experience a slight increase in interest rates, and slowing down of growth rate in the second half of 2013. It will not be wrong to say that the government expenses will increase due to the elections in 2014, and the government budget will corrupt slightly due to both the increase of the expenses and the debt costs.”