Turkey’s TUSIAD says methods of struggle in economy are wrong and asks: “What is plan B?”

Emphasizing that inflation has not been tackled with the right methods and time has been lost, TUSIAD (Turkish Industrialists Association) President Orhan Turan said that an exit from the crisis was still possible.

Answering the questions of SOZCU newspaper regarding the recent economic and political developments, Turan emphasized “time was running out” and said “The question we need to ask as reel sector in this environment where economic indicators are moving away from the desired framework is “these policies have obviously not yielded results. What is plan B of economic management?”

Orhan Turan, the President of TUSIAD, noted the following in his statements:

Question: We have been living through one of the worst periods in the history of inflation, exchange rates and CDS, with the Turkish Economic Model. When you evaluate the point from the TUSIAD front, what kind of picture do we face?

Answer: We have been sharing our criticisms of the economic framework drawn up over the past year from the very beginning. We are not fighting inflation with the right methods. That is why we are constantly witnessing the upward revision of the forecasts of public institutions. Whether it is inflation and the current account deficit, CDS and the exchange rate, we are far from the places we targeted in the first place. The more we insist on these policies, the more time we lose. Every lost time has an economic cost. In this environment, where economic indicators are moving away from the desired framework, we need to ask the real sector as follows; these policies have obviously not yielded results. What is plan B of economic management?

Question: What are the top 3 most important problems of Turkey in your opinion?

Answer: The deterioration of institutions, the problems we face in justice and the decline in the quality of education that we care about very much in terms of the future of our country, brain drain. In economics, you solve problems quickly and with the right steps, but it takes time to move forward decisively on these three issues that we have mentioned above. You cannot develop as a country unless you go forward with these issues.

Question: Do you foresee a sudden stop in the fall in line with the developments in the global and in Turkey?

Answer: There are two important issues that we are pursuing financially. The first of these is the maturity date between mid-August and the end of August on the Exchange Rate Protected Deposit. It is important how much companies will rotate KKM. The second is the Eurobond, syndicated returns in the fall. We have heard that foreign investors are not very eager because of the uncertainties. Every problem we have with the foreign exchange supply means depreciation in the TL. Therefore, these two periods have risks in terms of TL. On the other hand, we analyze that the slowdown in the economy has been severe recently as a result of both high inflation and tightening of financial conditions. This is both related to the slowdown in domestic demand, and is caused by exports and foreign demand. In summary, both the course of the TL and inflation and financial conditions pose a risk to economic growth in the coming period.

THE INVESTMENT ENVIRONMENT IS WEAK

Question: What kind of investment environment does the contradictions created by the current economic and monetary policy decisions, as well as the difficulties in accessing finance, high loan interest rates, create?

Answer: While inflation accelerated, Turkey preferred a low interest rate policy. We are experiencing the consequences of this choice today. These are high inflation and increased foreign exchange demand. The second stage is the high loan interest, the rising risk premium and the difficulty of accessing foreign capital that is accessing the foreign exchange source. While this is happening, we are spending Central Bank reserves in order to control the rate. We think that the purpose of all these macro-injunctions taken is not to tighten, but mainly to prevent currency escape. The inevitable consequence is that financial conditions are tightening, and access to credit is becoming even more difficult. At the end of the day, we are faced with high inflation, high loan interest and a depreciating TL.

If we had proceeded in the right frame at the very beginning, probably neither inflation nor loan interest rates would have been so high today. We have known there has been a shortage of supply of investment loans since November, because the banking system is also a commercial structure, and these loans are by definition long-term.

In order to be able to make long-term loan pricing, you need to be able to calculate and predict your costs. Each cost increase also means higher loan interest. In an environment of high inflation, there is a banking sector that is subject to constant regulatory changes and whose costs are increasing, and it is striving to make the right balance sheet and cash management in this unpredictable process. This also applies to the real sector. As a result of all this, access to credit is becoming expensive, the investment climate is weakening.

SOURCE: tele1.com.tr/ekonomide-mucadele-yontemleri-yanlis-diyen-tusiadtan-sert-cikis-b-plani-ne-675168/