Turkey was once shown among the “good examples” in the economy. It made a name for itself among the emerging market economies and was the center of attention in international meetings. It even became one of the countries on the radar of international capital looking for an address for investment, along with Brazil, Russia, India, China and South Africa.
Then, when things started to go wrong, Turkey started to be among the “fragile five”; it never left this category again; began to be associated with troubled economies.
Last week, there was an article in the Financial Times titled “Seven economic miracles of the anxious world”. He talked about what can happen if the right policies are implemented. While reading the article, I thought of Turkey’s journey, the wrong steps taken and the right steps not taken.
Ruchir Sharma’s article mentioned 7 countries: Vietnam, Indonesia, India, Greece, Portugal, Saudi Arabia and Japan. Each of these economies has different characteristics, but what they have in common is relatively strong growth and more moderate inflation rates. Stock markets also offer good returns.
First on the list Vietnamese is located. I have mentioned Vietnam before in this column. In the article titled “The story of Vietnam should be an example to other countries” on February 16, 2021, “The Vietnamese miracle is not just about economic success. The main story of Vietnam, which will set an example to the world, was the country’s struggle with the COVID-19 virus. However, when the epidemic started in Wuhan, it was shown among the countries that would be most affected by the coronavirus due to its 1,306-kilometer border with China. It was both a border neighbor and had a lot of trade with China. Moreover, the health infrastructure was thought to be inadequate. But Vietnam managed the crisis so successfully that the giant country of 100 million people coronavirus The number of cases and deaths remained very, very low. Maybe the recent SARS experience worked as well, but the main reason was successful leadership and crisis management.” Vietnam, which has the fastest growing economy in the world with an annual growth rate of 7 percent, maintains its feature of being a strong export country with its heavy investments in infrastructure. More importantly, it has become a strong alternative to China, both as a production base and a source of supply for western investors.”
In the second place Indonesia there is. It was one of the countries that Morgan Stanley put in the “fragile five” with us due to its high current account deficit and inflation, and its dependence on foreign financing. It has improved its situation with the effect of the increase in international commodity prices, but the good thing is that it is not overly dependent on exports. In addition, indebtedness rates are lower than other emerging economies; money is also more stable. Growing around 5 percent and inflation below 5 percent. economy.
India economy continues to be one of the fastest growing economies in the world. The secret of success is the reforms made in the past. While many countries postponed reforms, India made the necessary reforms. It made new investments in the digital field and manufacturing. In this way, it will be able to keep its economy away from the global recession.
Portugal and GreeceThe story is more interesting. Once upon a time Euro They were the sick men of Europe during the debt crisis. Together with Spain and Italy, they began to be called PIGS. PIGS, consisting of the first letters of the English names of these four countries, was a group of troubled countries. In his article, Sharma points out that these two countries have reduced their public deficits by half and are more exposed to gas supply shocks than other European countries. With the effect of the revival in foreign investments and tourism, Greece experienced an annual growth of 4 percent, while its inflation remained low. Portugal is also attracting investment. Inflation is low and growth is reasonable in the country.
Saudi Arabia oil but Sharma points to Saudi efforts to go beyond oil. Saudi Arabia, which has started to channel its oil revenues to infrastructure, is currently growing at around 6 percent per year.
Japan is the most surprising country on Sharma’s list. Growth accelerated “on the scale of Japan”, and inflation finally reached the desired 2 percent. The interesting thing is that labor costs are cheaper. With the weak yen, this situation continues to support Japanese exports.
It was a current situation assessment so far. The Financial Times writer has photographed the present rather than predicting the future. This picture can change at any time and get worse. Especially in 2023, when a global recession is expected, different shocks may affect these countries, but the current picture shows that when the right steps are taken, it pays off and provides a shield or a safety cushion to the economies. The example of Turkey, on the other hand, explains that gains are lost and the picture is distorted when inertia or moving away from the right policies.