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Indicators related to the last three crises in Turkey clearly demonstrate how different sectors react during crisis periods. This survey by Capital covers 9 basic sectors and serves as a sectoral r...

Son Güncelleme: 01.04.2009

Indicators related to the last three crises in Turkey clearly demonstrate how different sectors react during crisis periods. This survey by Capital covers 9 basic sectors and serves as a sectoral report card for the crises in 1994, 1999 and 2001. The survey found that the trade-retailing, manufacturing industry and transportation-communications sectors enter and emerge from crises at the same time as the economy as a whole. It is striking that mining is one of the sectors which takes the longest time to emerge from a crisis. When there are contractions, they last longer in finance, mining and construction than in any of the other sectors. The recessions in trade and industry are deeper.

hedHow Was The Study Conducted?
The study, which covers 9 basic sectors and demonstrates how each reacts to a crisis, defines a recession as a contraction in GDP for at least two quarters in succession. In determining the emergence from recession, the study used the criterion of whether GDP had or had not grown for at least two quarters in succession. The definitions of entering and emerging from the crisis were also used to determine when sectors entered and emerged from periods of contraction. A contraction which lasted for just one quarter was not counted. Neither was growth which lasted for only one quarter regarded as constituting an emergence from a contraction.

The evaluations of the sectors’ performances in the last three crises were conducted on the basis of the beginning and end of the recessions. The relationship between their performance and that of the economy as a whole was thus described in three basic ways: “simultaneous”, “earlier” and “later”. When the statistical data did not show any consistency at all, the phrase “no relation” was used. When there was a contraction in a sector in the quarter when the economy entered recession, or one quarter earlier or later than when it began, this was classed as being a “simultaneous movement”.

Different Reaction From Each Sector
hedAccording to our study, the sectors which react quickest to crises are retail-trade, manufacturing and construction. These three sectors reacted at the same time as the economy as a whole, and entered a period of contraction at the moment the first signs appeared. And they also emerged from recessions at the same speed.

The agriculture and transportation-communications sectors generally enter and emerge from a recession at the same time as the rest of the economy. The mining sector enters a recession at the same time as the economy as a whole but its emergence from a crisis is a little later.

There is no relationship between when the energy, tourism and finance sectors enter and emerge from a contractions and the timing of when economy as a whole experiences a recession. These sectors reacted differently to a recession in each crisis. For example, in the first two recessions, namely in 1994 and 1999, there was no contraction in the tourism and financial sectors. But in the most recent recession in 2001, the contraction in these two sectors started later and ended later. It is striking that the energy sector entered and emerged from the 2001 crisis at the same time as the rest of the economy.

When there was a contraction in the mining, construction and financial sectors, it lasted longer than in any of the other sectors and the contractions in the industrial, construction and trade sectors were deeper.

How Long Does It Last In Each Sector?

Finance Has The Recession Record
hedWhen one looks at the performances of the sectors in crises then one can see that the extent of the crises are different in each sector. For example, when there are contractions in the mining, construction and financial sectors, they last longer than in any of the other sectors, and the contractions are deeper in the manufacturing industry, construction and trade sectors. The figures show that the sector most affected by the 1994 crisis was the financial sector, where its effects lasted for 14 quarters. During the same crisis, the contraction lasted for 4 quarters in the economy as a whole, but 5 quarters in mining and 6 quarters in construction.

A Cumbersome Structure Lengthens The Process
In the economic crisis of 2001, which was one of the deepest economic crises in the history of the Republic and which seriously damaged every sector, all of the sectors emerged very late from the recession apart from the tourism and communications sectors. The record was in mining. During the 2001 crisis, the GDP figures began to show an improvement after 3 quarters. But it took the mining sector 9 quarters to emerge from the crisis.

It Is More Difficult For The Real Sector To Recover
The representatives of the real sector are more deeply affected by recessions than both GDP as a whole and the other sectors. The rate of contraction in manufacturing industry, construction and trade can be twice as high as the rate of decline in GDP. The fact that, in the 1994 crisis, manufacturing industry contracted by 9.2 percent and trade by 11.7 percent, even though the economy as a whole shrank by 6.7 percent, are each good examples of this phenomenon.

Yasemin Erdoğan
yerdogan@capital.com.tr

  

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