beyondbrics

Talking up your home market might seem like an obvious trap for analysts to fall into – but not, apparently, if you are Turkish.

Is this because Turks are natural bears – or is there something about the economy that is hard to predict?

According to research by Renaissance Capital, the difference in Turkish GDP forecasts for Turkish and non-Turkish economists is around 1.5 percentage points. Compared to Russian economists, who are also a bit more bearish than internationals, and the bullish Chinese and Indians, Turkish forecasts look positively pessimistic.

So What’s behind the discrepancy? Well, the RenCap analyst, Mert Yildiz – who is Turkish – points to factors such as Turkey’s low ranking in the world happiness index, the cultural prevelence of huzun (gloom), and the frequent use of minor chord progressions in Turkish music.

So far, so sad. But actually, there are economic reasons too. Turkish growth is more volatile – with a standard deviation of over five for the period 2000-11, compared to China’s standard deviation of under two. In layman terms: Turkey has swung rapidly from recession to growth, with -6 to +9 per cent GDP growth recorded over the last decade, whereas China has had a much steadier path.

Source: Google, World Bank

Yildiz also suggests that Turkish economists are largely liberal-minded and therefore have an inherent bias against the AKP, the ruling party, presumably hoping that slower growth will lead to political change.

Speaking to beyondbrics, Yildiz said that he expected “a little push back on that”. But he stuck by his thesis that nationality affects outlook. “As analysts, we all try to be unbiased, but it is hard sometimes not to be affected by sentiment.”

But beware – there is an element of guesswork involved in the research: “Despite our efforts, the best gauge of our assessment on local vs foreign economists are their names”. While Turkish names are relatively easy to identify, as Yildiz admits it’s harder to ascertain nationality in places such as India.

This writer’s name has prompted suggestions of nationalities including Italian, Portuguese and even Indian. It’s Scottish.

Related reading:
Analysts pick stocks with greater accuracy, FT
Too bullish, too bearish, whatever…, FT Alphaville
In depth: Financial Times/StarMine Analyst Awards