Businessmen see 2010 a year of ‘cautious hope’

The crisis hit fundamental economic indicators like production, exports, investments and unemployment, leading to massive stimulus packages taken by nations looking to protect themselves from economic freefall.

The speed at which governments enacted such measures was unprecedented, and possibly saved the global economy from falling into a further global slump rivaling the turbulent times of the 1920s.

The upturn in economic conditions in Turkey in the last quarter of the year has left many wondering whether the worst is over, and whether 2010 will make up for the losses in 2009. Although Turkey’s Medium-Term Economic Program (MTEP) released by the government predicted a return to growth in 2010, some in the business world are calling this overly-optimistic, while others are saying that the government should aim even higher. Regardless of the exact numbers, the Turkish business world, having seen the recent rays of hope in the economy, is hopeful about the coming year.

‘Our weapon is the banking sector’

“Strong dialogue between the government and the business world will lead to growth rates surpassing 5 percent,” stated Turkish Industrialists and Businessmen’s Association (TÜSİAD) board member Haluk Dinçer. Speaking to the Anatolia news agency, Dinçer noted that the MTEP’s schemes for 2010 were quite conservative, but added: “The government’s budget deficit has tied its hands… Thus our weapons are our strong banking sector, the entrepreneurial spirit of the business world and our experience in successfully dealing with crisis.”

Speaking on the MTEP in relation to his 2010 expectations, Dinçer highlighted that the 3.5 to 5 percent projected growth rate set forth by the government would not fulfill the needs of the economy, and would not solve the crippling unemployment problem and would lead to a loss of competitiveness of the Turkish economy. He added that the business world and the government needs to put forward more ambitious targets and work towards meeting them. Speaking on a potential International Monetary Fund (IMF) stand-by deal with Turkey, Dinçer stated that there was a need for a new deal because of the restrictive budget deficit and high public debt.

Form left to right: Ahmet Nakkaş, Erkut Yücaoğlu, Haluk Dinçer, Hikmet Tanrıverdi. From left to right: İbrahim Aybar, Nevzat Öztangut, Tanıl Küçük, Turgay Tanes.

Strong signs of recovery for industry

The industrial sector is the powerhouse of the economy, and signs of its recovery are strong, according to İstanbul Chamber of Industry (İSO) Chairman Tanıl Küçük. Küçük highlighted that industrial production had enjoyed its first unexpectedly high growth in October 2009, after 14 months of decline. “This development, even if it helps the morale of the industry, does not mean the industry has stabilized. The role of being the powerhouse of the economy is still on us, the industry,” Küçük noted. “We expect household consumption to increase by 2.5 percent in 2010, and exports by 11.5 percent, but the latest figures in the consumer confidence index reveal that domestic demand will increase slowly… Our exports increased by 3.9 percent in October on a dollar basis, and our industries have been able to minimize the fall in exports and slowly slow down production... In these conditions, for our hopes for 2010 to continue, the dollar-TL exchange rate must not fall,” Küçük stressed. He added that the 4.4 percent annual growth in extra revenues predicted of industry for 2010 would not cover the losses of 2009, and that with these figures we could go back to 2008 levels by 2011. “It is becoming obvious that it will take longer to exit this crisis fully than it did to exit the 2001 crisis,” Küçük stated.

Deal with IMF not obligatory

Former Chairman of the Turkish Industrialists and Businessmen’s Association (TÜSİAD) and MAP Electronic Commerce Services Company Board Chairman Erkut Yücaoğlu said that Turkey will be heavily dependent on global business cycles. “Turkey will grow by a higher rate than other countries because its structure means it dives into a recession deeply but also enables it to recover rapidly,” he said. Stressing that Turkey should adopt a new strategy by concentrating on new export markets, Yücaoğlu stated that this would at the least boost the business capacity of the country. “It is not possible for our exports to present markets to rise rapidly. So I believe it is the right thing for Turkish businessmen to seek new markets.” In regards to a possible stand-by deal with the IMF, he remarked that a stand-by deal is not obligatory but it would be advantageous for Turkey as it will provide the country with extra reserves.

Auto sector keep fueling growth

İbrahim Aybar, the chairman of the executive board of the Automotive Distributors’ Association (ODD), said nobody should expect growth in the automotive market unless Turkey’s economic grows in 2010. “It is possible for us to see stagnation in the automotive and commercial vehicle market in 2010. If measures to revive the domestic market are not taken, we expect stagnation in 2010,” he said. Aybar noted that possible tax incentives could help revive the sector in the new year. Noting that the sector saw a decline in production in 2009 despite tax reductions, he noted that the government should intensify their quest to keep momentum going in the domestic auto market. He stressed that Turkey has to maintain sustainable growth in its domestic market if it wants to retain competitive power in the global arena.

Capital markets see light ahead

Turkish Association of Capital Market Intermediary Institutions (TSPAKB) President Nevzat Öztangut said he expected the recovery period, which started in the capital market in the third quarter of 2009, to continue in 2010. “Recent indices suggest that the negative impacts of the crisis have started to slow down in the capital market and we hope such an atmosphere will also continue in 2010.” He said they also expected to yield the fruits of projects that were started in 2009. “The more expectations for a swift recovery in Turkish economy become apparent, the more foreign investors will turn their eyes to our market.” Recalling that the capital market has enjoyed an increase in turnover in the first nine months of 2009 over the same period of 2008, he said a similar positive sign could also be seen in employment in the sector. “The sector has doubled its turnover in the first nine months of this year when compared to same months of the preceding year. The increase in unemployment in the sector has also ceased in the third quarter. All these indices are encouraging before we enter 2010.”

Construction: Demand may linger

Turgay Tanes, the chairman of the executive board of the Association of Real Estate Investment Companies (GYODER), said he forecasts a limited rise in demand, along with investments and supply. Underlining that the current interest rates for loans are still high for middle and low-income customers, he said further declines in interest rates could jump start the sector in the new year. Making mention of increasing unemployment in the real estate sector, the GYODER head said a permanent recovery could take longer than anticipated. Tanes said the sector was recuperating thanks to some projects recently introduced as part of the 2010 İstanbul European Capital of Culture and the İstanbul Finance Center (İFM).

Textile sector eyes exports bounce

İstanbul Ready-to-Wear and Apparel Exporters Association (İHKİB) President Hikmet Tanrıverdi shared his assessments regarding his sector’s performance in 2009 and his predictions for 2010. Noting that the most serious problems of 2009 were the declining production, capacity utilization rates and exports due to contracting markets, Tanrıverdi said the ready-to-wear and apparel sector sustained a recession in performance rather than a contraction in real terms. There are positive indicators that the recession in the global economy has lost pace and this will surely have encouraging effects on the Turkish ready-to-wear and apparels industry, he argued.

Foreign procurement groups still want to purchase products made in Turkey, he acknowledged and said: “With the recovery in the global markets, we hope to attain the same level of exports as we achieved in 2008, which was $15.7 billion.”

Turkish Clothing Industrialists Association (TGSD) President Ahmet Nakkaş also offered his opinions regarding the possible course of the textile sector in the year ahead. According to estimates for the 2009 year-end, textile exports will decline by nearly 20 percent over the previous year to $5.5 billion while the ready-to-wear industry is likely to sustain a drop of 15 percent to $13.5 billion, he asserted. Unlike Tanrıverdi, Nakkaş was not hopeful that the 2008 sales figures could be reached in 2010. Rather he believes that the exports will rebound to their 2008 levels only after two or more years. In the post-crisis period, the developed nations will consume less and will be more prone to save whereas the people of the developing countries will spend more for consumption, he argued, and concluded that Turkish manufacturers should focus more on the emerging markets.