Mi­croe­co­nomic foun­da­tions of the Turk­ish econ­omy III: firms and en­trepreneurs

Turkish Review - - MICROSCOPE - TAPTUK EMRE ERKOÇ,

In­creas­ing growth rates in Turkey’s GDP level have a num­ber of pos­i­tive im­pli­ca­tions for the fu­ture of the econ­omy. To­tal out­put pro­duc­tion car­ried out by both public and pri­vate or­ga­ni­za­tions sig­nals a pro­gres­sive trend in the eco­nomic per­for­mance over­all. How­ever, a well-func­tion­ing econ­omy has to have trust­wor­thy and strength­ened mi­croe­co­nomic in­sti­tu­tions that are shaped by the de­ci­sions of firms, con­sumers and non-gov­ern­men­tal or­ga­ni­za­tions This is­sue Mi­cro­scope ex­am­ines the role of firms, con­sumers and NGOS, be­gin­ning with the lat­ter. In this piece, the last part of this se­ries, key statis­tics re­lat­ing to the busi­ness dy­nam­ics of firms and en­trepreneurs are an­a­lyzed; eco­nomic con­fi­dence in­dices, industrial pro­duc­tion, trade and ser­vices statis­tics and fi­nally for­eign trade fig­ures.

En­trepreneurs and their firms have a piv­otal role in the econ­omy in the sense that their eco­nomic ac­tiv­i­ties are in­ter­wo­ven with mi­croe­co­nomic play­ers in the mar­ket as well as macroe­co­nomic in­di­ca­tors such as un­em­ploy­ment and GDP growth. There­fore, the in­sti­tu­tional set­ting that frames the busi­ness arena of the firms be­comes very rel­e­vant for the eco­nomic growth level of coun­tries. The lat­est an­nounce­ments from the Turk­ish Statis­tics In­sti­tute (Turk Stat) on the in­dices re­lated to firms and en­trepreneurs pro­vide a snap­shot of some of the econ­omy’s sig­nif­i­cant ac­tors.

ECO­NOMIC CON­FI­DENCE

The over­all eco­nomic con­fi­dence in­dex be­gan at 95 in Septem­ber 2014 and ended at al­most 87 in Fe­bru­ary 2015, with an 8 per­cent re­duc­tion ob­served dur­ing the last six months. More­over, the in­dex reaches its peak value in Oc­to­ber, where a dra­matic fall (nearly 10 per­cent) is recorded in the in­dex. It is ap­pro­pri­ate to em­pha­size the fact that this re­duc­tion in the over­all eco­nomic in­dex, which re­flects the av­er­age con­fi­dence lev­els of the con­struc­tion, ser­vices and re­tail trade sec­tors, sig­ni­fies a dis­tress­ing mes­sage re­gard­ing busi­ness trust in the cur­rent sta­tus of the mar­ket. Con­clu­sively, Fig­ure 1 il­lus­trates that whereas the re­tail trade and real sec­tor in gen­eral ex­pe­ri­enced a down­ward trend -- in par­tic­u­lar dur­ing the last two months shown -- the ser­vices and con­struc­tion sec­tors were on the rise from Jan­uary to Fe­bru­ary.

INDUSTRIAL PRO­DUC­TION AND TRADE AND SER­VICES

In ad­di­tion to the eco­nomic con­fi­dence in­dices in­di­cated above, this sec­tion as­sesses the monthly industrial pro­duc­tion in­dex of 2014 (shown in Fig­ure 2). In this spe­cific anal­y­sis, monthly industrial pro­duc­tion faced ebbs and flows through­out 2014, when val­ues ranged from 119 to 123. The statis­tics de­tailed in the fig­ure re­fer to the fact that industrial pro­duc­tion in­creased from the be­gin­ning of the year to the end, but prob­lem were ex­pe­ri­ences ac­tu­al­iz­ing steady growth. In ad­di­tion, the con­stant in­crease-de­crease cy­cle im­plies that Turkey’s

THE OVER­ALL ECO­NOMIC CON­FI­DENCE IN­DEX BE­GAN AT 95 IN SEPTEM­BER 2014 AND ENDED AT AL­MOST 87 IN FE­BRU­ARY 2015

in­dus­try sec­tor may have struc­tural weak­nesses that pre­vent con­tin­u­ous growth within the sec­tor.

The in­dex de­vel­oped by Turk Stat to eval­u­ate the cur­rent sta­tus of the trade and ser­vice sec­tor is a turnover in­dex that cor­re­sponds to the ag­gre­gate value of goods and ser­vices de­liv­ered in the afore­men­tioned sec­tors. Ta­ble 1 re­veals the re­cent statis­tics in the turnover in­dex cov­er­ing the four quar­ters of 2014. The ap­par­ent in­crease in the turnover in­dex from 137 to 172 puts for­ward a clear state­ment that the trade and ser­vice sec­tors are per­form­ing well in terms of the value of their over­all amounts of pro­vi­sion of goods and ser­vices, which is line with the first eco­nomic con­fi­dence in­dex be­long­ing to the ser­vices sec­tor in Fig­ure 1. More­over, a promis­ing in­crease in the turnover in­dex is spot­ted in the sea­son­ally and cal­en­dar-ad­justed in­dex, de­spite a slight shrink­age in the sec­ond quar­ter. On the other

MARCH 2, 2015 PHOTO: CİHAN, RIA NOVOSTI

Ex­port-friendly poli­cies and in­sti­tu­tions are in­dis­pen­si­ble in the re­duc­tion of Turkey’s trade deficit.

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