Hormonal Growth - Growth but in which direction and with what pace…

Hormonal Growth - Growth but in which direction and with what pace…

It is very important to choose the right parameter if you want to compare yourself. Your performance must be realistic in the eyes of others, too. It is sometimes not reasonable to compare your past performance with the current one, especially with the worst one. There are ups and downs in someone’s life and they don’t show any sign of normality.

This situation is also valid for institutions. They must be consistent and transparent in their decisions. They shouldn’t have any hidden agenda. They must be predictable in order not to fool the people which do believe in their comments and statements.

For todays’ economies performance is everything. It is the key for developing countries like Turkey to attract investors and fuel the economy with long term investments of foreigners. The question which stands against those stories is the trustworthiness. If a teacher would change its grading methodology after the first exam there could be question marks in heads of the students about the reason. Does the teacher change the grading method in order to prevent giving higher scores or did it in favor of the children to increase their GPA’s? In a competitive world a school does this in order to uplift their students’ success rate and get more credit. With this reputation it could easily increase its tuition per student.

Like schools, governments use the same tricks to get ahead of other countries and to be able to reach hot money as quick as possible. In order to align the System of National Accounts (SNA-2008) and the European System of Accounts (ESA-2010) the Turkish Statistics Institute (TUIK) make some modifications to its GDP calculation method in 2016. This new methodology helped TUIK to extend its dataset. With the support of the national income administration and the Social Security Institution, TUIK could include small- and medium-sized enterprises’ to its calculations. Addition to that there are other modifications and adjustments in other components subjected to GDP calculations like savings, share of sectors like construction (increased its weight in economic activity calculation), etc.

With the expenditure approach GDP has over performed its previous Yoy performances from 3Q2011 till the last announcement.  With the new methodology, it seems that Turkey have beaten the odds. The 11.1% yoy increase in 3Q2017 is a sign of recovery for our nation. But again the question must be: “Is it realistic, because it seems too good to be true”. The 1998 data which is 97.4% correlated with the new base 2009 data, the GDP in 3Q2017 must be increased by 8.8%.

So we came to the conclusion with different angles:

-          TUIK has decided to change its methodology according to EU standards. The problem is that EU considers 2010 as its base year for the calculations, which is more reasonable considering financial crisis throughout the world in 2009 (mortgage & subprime).

-          From the graph below we can clearly find out about the plunge of Turkish economy in 2009, which must be an outlier for TUIK’s calculations, instead of base!

-        How much do we trust on household and non-profit institutions serving households (NPISH) if we add inflation to the equation? If the inflation will continue to raise with this pace, will it be possible for this group to spend more which do have more than 50% share on GDP expenditure components. Does the graph below shows the reality or is it also a painted beauty? The consumption pattern shows the same direction like each other year but it is more aggressive in 2017 compared to 2015 and 2016.