BY KORKMAZ ILKORUR
RADIKAL- Our economy has been breaking records. As demand fell, exports boomed. Economic growth last year was 6%, although some say the numbers are exaggerated. Turkey has shown positive growth for 20 straight quarters. The current account deficit is bit too high, but the good news warms the government's heart. As for me, I'm not pessimistic but rather cautiously optimistic.
That's why I'm writing this column today. Today I'd like to quote from a guest op-ed in last week Britain's Financial Times written by William Rhodes. I even took my title from him. Who is William Rhodes? Followers of international finance know him well. He's the senior vice president of Citigroup and the president and CEO of Citibank. But what's important here is that he's also first vice chairman of the Institute of International Finance, which concerns itself with developing economies. Rhodes sometimes comes to Turkey, and his words are valued by Turkish financial circles.
At the beginning of his op-ed, Rhodes analyzes the positive developments of the world economy regionally. 'Much of the good news has come as a result of extraordinary levels of liquidity pouring into opportunities around the globe,' he writes. 'To a large extent this is due to the Federal Reserve's expansionary monetary policies early in the decade and the US administration's fiscal stimulus. The yen carry trade has also facilitated the buoyant expansion of investments and leverage evident everywhere today.' It provides resources for investments and credits, he adds.
Rhodes has another insight. 'It has been my experience that periods of economic expansion tend to last between five and seven years,' he says. He also writes that the correction seen last May was a soft one and reckons that as America is now in its sixth year of expansion, there will be a real, and serious, correction within the next 12 months.
Lastly, Rhodes writes about the new actors such as hedge funds and private equity, about which I wrote in past columns. He further stresses that the most important issues will not be inflation, growth and interest rates themselves but the management of the destabilization and corrective effects of these international actors in international markets.
In sum, we should be optimistic but also cautious.