Solutions in Economics and New Expansion to Real Sector

20 JANUARY 2009

IUE Rector Prof. Dr. Attila Sezgin discussed that Paul Krugman the winner of Nobel Prize for Economics had explained the importance of global crisis we are experiencing by comparing it with “Big Depression” era and thathistorical perspective could be instructive for Turkey and said “Our actual agenda should be production, employment and therefore real sector. The crisis can also mean the cases where institutional transformations are experienced, implicit or open social agreements are rechecked and where opportunities for advancing surface. Thus, I hope that three principle problems about Turkish economics and especially the real sector dynamics in medium and long term will be discussed by the participants of the panel. First of these is rising the workforce education level. The common point in all developed countries is the high level of education observed in the labor force. This feature which has a direct relation with the rise of efficiency unfortunately is not taken seriously for Turkish economics. The average education level of the working labor force is 6 years. In South Korea this number is about 11. Advantage in paying premium can be provided for the companies that employ people with high school diploma or higher. “Positive Discrimination” can be applied for woman workforce with high education level.”

IUE Board of Trustees President and ICC Board of Directors President Ekrem Demirtaş stated that according to the bosses of the economics in the world the year 2009 will be a year of struggling with global crisis. He said “Not only the USA but the whole world is waiting for the explanation of Obama about the incentive package with 310 billion dollars. They are taking precautions for struggle with the recession. Even IMF changed its receipt. The economics of our country is being seriously affected by the global crisis. The President of the Central Bank states that a second wave in crises could be possible. As a precaution the indicator interests are dragged down for two points. Our minister of Finance gave some clues about precaution package. It is a good development; however we were expecting these precautions to be taken earlier. Providing confidence in the markets is more important than anything, because, the crisis in our country is expected to have more impact on the real sector. Serious decrease in the development of the crisis is among expectations. That is why today we need to be cautious. Our businessmen have to make plans according to this. Growth is almost at a standstill, maybe a recession will be experienced after 7 years. Export is on decline. Industry production drew back. The rate of unemployment rose to 10.9. All of these indicate that the Government could not take enough precautions about global crisis in 2008. Today, the state of markets is apparent. What has to be done is to minimize the effects of the crisis. That is why the precautions have to be taken immediately.”

Turkish Board for Exporters President Mehmet Büyükekşi stated that in spite of the decrease, exportation closed 2008 with a record and said “That is very important. If we look at the world we can understand its importance more. The most important thing is that we are not demoralized. We are in a better state than 2001 crisis. This increase should be protected by diversifying the export and directing it to different markets. If compared with that crisis, we rose from 5 countries to 28 countries. While 8 sectors were exceeding 1 billion, today 19 sectors achieved this; it rose from 4 cities to 11 cities. We are expecting 17 percent decrease in 2009. We believe that this will be better in 2010. The most important thing is to recover our morale. We had hard time sue to low exchange rates. It is better now. We have a target of 500 billion dollars for 2023. We are working for making it real. We are supporting the works of Central Bank. However, we believe that it will be an important contribution to provide a discount of 25% to the ones who have no SSK debt by supporting them from unemployment fund on condition that they do not lay off.”

Turkish Economy Bank General Director Varol Civil said that banking sector was criticized again like in all crisis terms and said “First of all this crisis is not like to 2001 crisis. The crisis in our county is different than the crisis in the world. There is a financial crisis in the world but we are experiencing a real crisis. Our banks are standing on contrary to the banks in the world. The lessons taken in 2001 crisis and the supervisory boards have a share in this. We can turn this crisis into our favor with right moves. Even our current deficit has decreased due to decreases in the prices of petrol and so forth. Now we have to read the crisis well, foresee the post-crisis and act accordingly. If we accelerate the real sector we can even make a profit from the crisis. I believe that the Turkish banks will do their part about the credits. We will of course be more cautious however we will support the real sector and consumption. We will succeed in this by the precautions taken in finance.”

Small and Medium Industry Development Organization Vice President Mustafa Kaplan emphasized that we had to act not in panic but by determining all the effects of the crisis and said “Like other speakers I also believe that we will get over this crisis with less damage if we direct it well. As Small and Medium Industry Development Organization, we gave 1.6 billion YTL interest-free standby credit in 2008. That is not enough of course but that is what we can do. We need to find ways to increase production and consumption in order to get over the crisis. We have to x-ray the crisis without taking decisions in panic and do what is needed. We have to clear our defects and fix them. Collaborations, coalitions will gain importance in the upcoming days. We are encouraging them. We believe that the credits should be provided more. We need to move to defeat crisis and turn it into an opportunity.”