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The Kapali Carsi

Are Turkish Growth Numbers to Be Questioned?

Not in the sense of Greece, or more recently China... But writing in Radikal, Fatih Ozatay has been noting that the surge in gold imports and exports, (which I was one of the first to mention, and then I summarized the Turkish & international media reaction in a separate post), has been distorting the GDP figures:

It is important to note that if imports and exports both rose roughly the same amount in the same quarter, the net effect on growth would be zilch. But as you can see in the graph above, that is not the case at all: As I noted before, imports jumped first, and then exports: Simply put, we needed to import gold first before participating in the unofficial “oil-for-gold” program with Iran. This means that growth in the last quarter of turned out to be less than it would have been without this igneous scheme, and in the first quarter of 2012 more. By how much? According to Ozatay, if Turkey had exported USD 1bn less gold in the first quarter, yearly growth would have been 2.6 percent rather than 3.2 percent. His analysis is very crude, and partial equilibrium, but I think it is accurate enough: After all, if the mechanism I summarized in the previous gold post is true, the import-export scheme is not taking up any many resources of the economy.

In the second quarter, both imports and exports have surged, but exports more so, so we will probably be getting another “inflated” growth figure…

Finally, it is important to note that we had an import-export surge in 2008-2009 as well. I have not really looked into why that was the case (or I just forgot), so any comments on that would be welcome…

2 Responses to “Are Turkish Growth Numbers to Be Questioned?”

ThomasJuly 20th, 2012 at 5:48 pm

Emre, I may not articulate it well, but this is the exact thing I've been questioning for the past several months, and in my contact with you. According to TIM, "Export Value exempted from Exporter Associations’ Registration" was $3.73 Billion USD in the Jan-June time period this year and $23 million (million not billion) in the same period in 2011. I belive this huge growth area is this area you are talking about, treating as exports gold in payment for oil. The Trade Ministry extolled 11.28% growth in exports in the 1st 6 months this year. Without these "exempted" exports, export growth would have been cut in half. What do you think?

Emre Deliveli edeliveliAugust 3rd, 2012 at 9:18 am

Yes, I think we are saying the same thing. But TIM figures don't have unprocessed gold at all – I don't think it is even registered under "Export Value exempted from Exporter Associations". To get the gold effect out, it is easy to look at exports and imports excluding gold…