BY YENER KARADENIZ
Turkish Industry and Business Association (TUSIAD) President Orhan Turan stated that the decrease in inflation due to the base effect should be considered as an opportunity, but that macro-prudential measures cannot be a substitute for the monetary policy in reducing inflation. “From this point, it is necessary to formulate the monetary policy within the framework of the fight against inflation, and to construct the fiscal policy in a way that supports the fight against inflation,” Turan said.
Turan pointed out the “very high” risks and uncertainties regarding the global economy in 2023 in the opening speech he made at the ‘Turkish Economy’ seminar, which is annually organized by the Economic Research Forum (EAF), established in partnership with Koc University and TUSIAD. “Turkish economy started the year with negativities such as high inflation rate, the slowdown in growth, external deficit and increase in public deficit,” he stressed.
Recession is expected in Europe and many developed countries with the effect of tight monetary policy in the first half of 2023 and the growth is expected to be very weak in the U.S., Turan noted. “A growth process will start again, albeit weakly, and exports will revive with the second half of the year, in parallel with the policies implemented in the world economy,” he said.
The economic conditions and policies will differ in the post-election and pre-election process independent of the election results, Turan stressed adding that Turkey will have to enter the normalization process just like the rest of the world in the second half of 2023. “The most important condition for this is to reduce inflation and to establish economic stability. The fact that inflation has entered a declining process with the base effect from its very high levels should be taken as an opportunity. However, considering that macroprudential measures cannot be a substitute for monetary policy in reducing inflation, the monetary policy should be formulated within the frame of the fight against inflation, and the fiscal policy should be constructed in a way that supports the fight against inflation,” he said.
A SERIES OF MEASURES ESSENTIAL
Addressing the importance of 2023 as the centennial of the foundation of the Turkish Republic, Turan pointed out that this is an opportunity to deal with a series of structural problems that had left their mark throughout the first century with the will to solve. “A growth model that had difficulties in creating welfare and employment, a production structure stuck in low-tech products, low added value, high dependence on imports, and unbalanced in terms of regions, and corporate structures that had quality and reputation problems are not of a nature to support our country’s competitiveness in the international arena in the second century of our Republic,” he stated.
A series of measures should be implemented without wasting time, he warned. “In short, we need to complete the structural reforms that we talked about a lot but postponed until now. These reforms are of decisive importance both in terms of maintaining our competitiveness in the global order where instability has become the new normal, and in reaching the level of prosperity we long for in our second century,” he concluded.
The monetary policy should be formulated within the frame of the fight against inflation, and the fiscal policy should be constructed in a way that supports the fight against inflation.
