TÜSİAD President Kaslowski: If we are taking the right steps, why is inflation so high?

The Economic Research Forum (EAF), established in cooperation with the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD) and Koç University, held a panel themed “Turkish Economy as We Enter 2022”. Speaking at the opening of the panel, TÜSİAD President Simone Kaslowski made evaluations about the economic developments on the agenda.

Referring to the high inflation rate, Kaslowski’s statements that the steps taken regarding the new economic model should be reviewed drew attention. Kaslowski said that the world is in a faster transformation than expected and that those who grasp this transformation quickly and realize this transformation will have a higher chance of coming to the fore. “Therefore, we will have to break the rules in every field,” said Kaslowski.

Dollarization continues to increase Pointing to the consumer inflation, which rose to 36.08 percent in December, the highest in 19 years, Kaslowski said: “The high inflation figures announced at the beginning of the week clearly show that we need to reconsider the steps we have taken. Are we really taking the right steps in the fight against inflation? If these are the right steps, why is inflation so high? Yes, when we look at it today, our exports completed 2021 at an extremely high level of 225 billion dollars. Last year, we recorded a growth of over 10 percent in real terms. But when we look ahead, how much do the existing conditions support predictability and the investment climate? How sustainable is this process? Have the steps we have taken recently brought us to the point we desire? Dollarization continues to increase. Aren’t we missing the big picture as we turn to short-term workarounds? Why don’t market interest rates or loan rates decrease even though we have reduced interest rates? Rather, it is rising. What has this past 3 months taught us? Time is precious. As a country, the cost of using this time more accurately is now higher than before.”

predictability concern

TÜSİAD President Kaslowski said, “What we need to focus on as a country is to stay true to the free market operation and to shift to a production environment that supports green transformation based on high value-added technology with productivity increase” and argued that this will bring an increase in exports. Criticizing that the point we focus on as a country does not adequately coincide with today’s global economic realities, Kaslowski said, “If the methods we apply do not reach our wishes, we will have to come up with new methods or compromise from more liberal market functioning every time. This harms productivity while also distorting competitive market functioning. Let’s not forget that this method seems to offer a temporary solution in the short term, but also harms predictability. At the end of the day, it also keeps our country away from the increase in welfare that we want to achieve in the economy.”

“Model seeking and obsession is wrong”

In the panel where Kaslowski made the opening speech, economists Cevdet Akçay, Gizem Öztok Altınsaç, Ege Cansen, Selva Demiralp, Uğur Gürses and Hakan Kara took part as speakers. Referring to the measures taken against the rapid rise in the exchange rate, Ege Cansen said, “Trust in TL has been lost. It’s like braking on ice. Today it is not the car that stops with the brakes, but its wheels. We continue to slide on the ice. We have entered a difficult period. TL has come to a point where it cannot carry the Turkish economy,” he said. Cevdet Akçay, on the other hand, pointed out that his search for models and his obsession are wrong. Akçay stated that there is no model in the economy at the moment, not even a framework. Uğur Gürses, on the other hand, said, “We have entered a period of uncertainty in the economy. The economic crisis should be discussed within the framework of the political crisis,” he said. Gizem Öztok Altınsaç also stated that the tightness in the TL continues and there are deteriorations, and said, “We are an economy that cannot get out of the exchange rate, inflation and interest rate spirals. Even revolving loans are very high. It is not possible for investments to go up without lowering the loan interest rate,” he said. Selva Demiralp emphasized that Turkey prefers to grow at the expense of inflation, emphasizing the problems caused by lowering the current account deficit with low interest rates. Hakan Kara, on the other hand, warned that exchange rate volatility affects the behavior of the real sector, which will slow down investments.

Source: Dünya Gazetesi by www.dunya.com.

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