The president of the Turkish Industry and Business Association (TÜSİAD), Orhan Turan, has said that the economy is faring worse every single day, inquiring about the government's “plan B.”
“We are not fighting inflation with the right methods...The economic recession has intensified. As long as we insist on these policies, we are losing time. And every lost time has a cost economically,” Turan told daily Sözcü in an interview.
“In an environment where economic indicators are getting further away from the desired framework, we, as the real sector, need to ask: It is obvious that these policies did not give a result. What is the economic management's plan B?” Turan asked.
Turan emphasized that the economic conditions will worsen and access to financial capital will get harder if the current policies stay intact.
“Turkey has chosen a low interest-rate policy amid increasing inflation. We are living the results of this choice today. These are high inflation and increasing demand for foreign exchange. And the second step is high lending rate, increasing risk premium, and difficulty in access to new foreign exchange, meaning foreign capital. While these are happening, we are spending the Central Bank's reserves to be able to control the foreign exchange rate.”
As for Turkey's “most important three problems,” Turan listed: “The damage to our institutions, problems we experience in justice and the decline in education quality which we care a lot about in terms of our country's future -- brain drain.”
“You can solve the problems in the economy with fast and correct steps, but proceeding with determination with regards to these aforementioned issues takes time. A country cannot develop unless it prospers with regards to these issues,” he said.
Loosening inflation’s grip is proving harder to achieve in Turkey because the Central Bank has refrained from raising its key rate from 14 percent under pressure from President Recep Tayyip Erdoğan who believes -- contrary to mainstream economics -- that higher rates cause faster inflation.