The New Economic Program (NEP) for 2020-2022, in addition to prioritizing productivity and being a program focused on production and small and medium-sized enterprises (SMEs), signaling the transition to a new economic model, has led to the rise of new motivation in economic circles.
As Treasury and Finance Minister Berat Albayrak stated in his speeches over the last year, we are now discussing a new understanding and model, in which, from now, the real sector and cost management that will strengthen the position of the Turkish firms in the global competition are put forward and that a financial system that functions at full capacity and strengthened by the capital market plays an active role in the financing of the real sector.
A year ago, when the first NEP was announced, it was predicted that the balancing-discipline period would last until the end of 2020. On the contrary, we are leaving behind a year that once again proved just how strong the immune system of Turkey's economy is where effective measures were implemented. The fact that the Turkish economy showed such a rapid recovery in terms of macro balances and the normalization process in the economy has surprised international organizations.
Global investors, while leaving aside last year's dark scenarios on Turkey broadcasted by some international economic circles, are rapidly internalizing the messages of the new NEP. At this point, as stated by Albayrak, it is critically important that reducing inflation to acceptable limits below 5% remains the main priority for sustained growth and sustainable employment.
Following this main objective, the Central Bank of the Republic of Turkey (CBRT) should not be left alone in the fight against inflation, and we will carefully follow the monetary-fiscal policy coordination, the effective fight against inflationary stickiness and the measures to reduce the reflection of exchange rate fluctuations on inflation.
Similar to the previous year, the harmony between macroeconomic targets in the 2020-2022 NEP has attracted attention. Effective measures that will come into place for the fight against inflation, with the elimination of "stickiness," can drive annualized headline inflation, which is expected to be around 12% by the end of 2019, to under 9% in 2020 even if economic growth accelerates. We will continue to discuss the details of the NEP in the coming days.
On-point decision from Volkswagen
The final decision that international economic circles have been impatiently waiting for a few months on whether the Volkswagen Aktiengesellschaft will be in Turkey or Bulgaria, where the company will invest in, was made. With Turkey's Manisa chosen. The Presidential Investment Office has been putting in intensive efforts on Volkswagen's $1.4 billion investment. Besides the success of the Investment Office, Volkswagen is aware that it has made the right decision knowing that Turkey is one of the world's leading automotive production centers in a geography that has been the center of trade and production for 7,000 years. The investment in Manisa, which aims to produce 300,000 units per year, will provide employment for 5,000 people. It is stated that the plan is to produce the Skoda and Seat's SUV models in the first stage.
Since the 1950s, Turkey has been chosen by leading international companies from Western countries as an important manufacturing and logistics center. Even though Turkey's global perception is under attack since 2013, when carefully analyzed, its skilled blue and white-collar workforce, its importance as a trade crossroad, the appeal of its population and purchasing power over the next 50 years – all put Turkey's affinity as a production and investment center for international brands and companies.