Seyit Ardıç, President of Ankara Chamber of Industry (ASO), stated that the steps taken without bringing inflation under control do not stabilize the macroeconomy. Underlining that the current monetary transmission mechanism cannot break domestic consumption, Ardıç said, “Domestic consumption remains high according to this interest rate level.”
Ankara Metropolitan Mayor Mansur Yavaş was the guest of ASO February Assembly Meeting.
Speaking at the opening of the meeting, ASO President Seyit Ardıç said that on Turkey’s agenda is whether the tightening policies of the Central Bank will continue after the change of president. Ardıç also stated that local elections are also on the agenda.
Ardıç noted that supply chain and freight prices along with the Red Sea continue to keep the perception of risk and uncertainty high. Underlining that the economic slowdown weakened growth, Seyit Ardıç reminded that the UK and Japan entered a technical recession.
Noting that bitter experiences show that steps taken without bringing inflation under control fail to achieve stabilization, Ardıç said, “In the current situation, the monetary transmission mechanism cannot break domestic consumption. While the central banks of developed countries can easily break this with interest rate policy and pull inflation down, we cannot. There is a serious irrational situation in pricing behavior.”
Seyit Ardıç stated that domestic consumption in Turkey is still high compared to the current interest rate level, “While tight monetary policy tries to tackle the demand side of inflation, tight fiscal policy should also accompany this process. But we see that fiscal policy has not been tightened enough. On the other hand, it is also questionable how much we have tightened monetary policy” he said.
Stating that while revenue-increasing tax measures were put into effect, expenditure-reducing measures could not be seen, Ardıç said that the business world expects public expenditures to be reviewed within the framework of effectiveness and efficiency based on rational grounds. Emphasizing that monetary policy alone is not sufficient for welfare increase and sustainable growth in the fight against inflation, Seyit Ardıç said, “A holistic policy preference needs to be put forward and implemented with determination.”
Seyit Ardıç stated that labor costs are higher compared to the countries they compete with, and that the minimum wage has reached the level of 1000 dollars, which makes it difficult to enter new markets. Stating that the necessary foreign currency position in the balance sheets will not be reached in the coming period since the industry mainly exports based on imports, Ardıç said that the earnings before interest, depreciation and taxes (EBITDA) ratio has declined to 15.4 percent and asked how companies can make a profit with 53.4 percent debt and 15.4 percent EBITDA margin.
