The Kapali Carsi

Turkish data marathon deceives most

In Turkey, we have a “Turkish economy data week” once every three months, as quarterly National Income Accounts are released along with the monthly Balance of Payments and industrial production figures.

Dec. 11’s October current account deficit did not get much attention, as it was in line with expectations. Markets were also still busy trying to digest the previous day’s disappointing growth and industrial production numbers. However, I am more worried about the deficit than the other two.

The first paragraph of my latest Hurriyet Daily News op-ed summarizes what the column is about. I then explain why I am worried about the current account deficit and not growth and industrial production. As for growth, I argue that investment is showing signs of pick-up, but the crucial question is whether consumption will recover. Anyway, you can read the whole thing at the HDN website.

I am used to the arguments in my columns almost immediately disproved!:), so it was a relief when business channel Cnbc-e’s preliminary consumer confidence indices rose sharply in December for a second-straight month (provided the actual indices will not surprise on the downside).

If you speak Turkish, there is a short note that accompanied today’s data.

Changing gears, gold exports have not only affected the current account deficit, but also growth. Neil Shearing of Capital Economics noted to Financial Times beyondbrics blog that “without the gold surge, the economy would have slipped into recession,”. Over the long run, the positive and negative effects of the gold trade on growth would cancel out, but Neil is of course correct for the third quarter.

Changing gears yet again, I recently saw somewhere (I am not sure where) the relationship between industrial production and the Istanbul Stock Exchange Industrials index. I found it so interesting that I had to reproduce it here:

I am not an equity analyst, but I am not blind, either!:) You don’t need to be an equity analyst to notice the relationship completely broke down in 2012. Note that the ISE was one of the best, if not the best, performing stock markets in 2012. Which makes me wonder, without any knowledge of equity analysis (when you say PE, the first thing that comes to my mind is physical education, I am that hopeless), how much further this rally can last. But I can refer my loyal readers to a recent research piece on the very subject by Credit Suisse

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