Türkiye's economic management has created a successful framework and risk management, but the program involves a dynamic process and needs a "fine-tuning" and review, the head of a leading business association said, according to remarks published on Sunday.
"We will not set aside the fight against inflation, but with fine-tuning, we need to review the exchange rate policy, export regime, and import regime within the program. I believe we must design and implement this integrated process very quickly," said Şekib Avdagiç, the chairperson of the Istanbul Chamber of Commerce (ITO).
Speaking to journalists, Avdagiç said that thanks to the successful work of the economic management over more than three years, Türkiye has moved from a problematic foreign exchange reserve situation to a much more reasonable level, and that an important goal has been achieved in terms of external funding access.
However, he noted that with the developments triggered by the war, it would be appropriate to evaluate the situation from a broader perspective.
"As the business world, we have tried to contribute as much as we can to achieving the targets of the economic program. For this, the business community has also paid a significant cost," Anadolu Agency (AA) quoted him as saying.
Avdagiç's remarks on the economic program, which was put in place in the middle of 2023, marking a shift to more conventional macroeconomic policies to curb soaring inflation, come amid some calls to pause the fight against inflation amid the ongoing war in the Middle East.
Earlier this week, Treasury and Finance Minister Mehmet Şimşek sought to dismiss these calls, arguing that sustainable and high growth can only be achieved through low inflation.
"This is a very myopic approach," he said. "The path to permanent and high growth is through the process of low inflation. If inflation falls, growth will multiply."
Türkiye's annual inflation dropped to 30.87% in March from 31.53% in February, compared to the peak of around 85% in October 2022 and around 65% in 2023.
Responding to a question about the central bank’s interest rate decision, Avdagiç went on to say that: "I do not think it would be very correct, realistic, or result-oriented to look at the issue merely as a simple interest rate increase or a decision to keep it unchanged."
"I believe we are entering a period where economic processes must be reviewed holistically in terms of the sustainability of the business world," he argued.
"The economic management has created a successful framework and risk management. It is not possible to ignore our gains," he maintained.
"At this stage, however, we think that, together with the conditions brought by the war and taking into account the expectations of the business world, some updates are needed in the policy that has so far been financial- and reserve-heavy," he added.
"Of course, the program involves a dynamic process. We will not set aside the fight against inflation, but with a fine-tuning, we need to review the exchange rate policy, export regime, and import regime within the program. I believe we must design and implement this integrated process very quickly."
The war between the U.S., Israel and Iran, which began two months ago, has led to a notable ascent in global energy prices, while also threatening supply chains of raw materials, including fertilizers, which are used for crops.
The conflict has added pressure on countries relying on imports, but in the face of disruptions, Ankara has touted the success of its diversification strategy and relatively low dependence on Gulf countries for oil and gas supplies.
In response to uncertainties, the Turkish central bank has, in both of its last policy meetings, kept interest rates unchanged at 37%.
