Members of the Turkish Industry and Business Association (TÜSIAD) met with Treasury and Finance Minister Mehmet Şimşek in Istanbul, marking the respected veteran policymaker’s first official meeting with business executives since his appointment earlier this month after President Recep Tayyip Erdogan won reelection that extends his rule into a third decade.
Analysts and investors suggest Simsek’s return and appointment of Hafize Gaye Erkan, a former Wall Street banker, as central bank governor, signaled an economic policy overhaul could be in the pipeline of the newly elected government.
Any inflows of foreign funds to Turkey should be used to replenish central bank reserves, not to strengthen the lira, a top member of leading business association TUSIAD said on Friday.
Expectations that Ankara would return to orthodox policies strengthened after Erdogan appointed Mehmet Simsek, who is highly regarded by markets, as finance minister and Hafize Gaye Erkan, a former Wall Street banker, as central bank governor.
Turkish authorities are now hoping foreign investors will return after a years-long exodus, though market watchers cautioned that Erdogan turned to conventional policies in the past only to change his mind shortly after.
After TUSIAD representatives met Simsek on Friday, the head of its high advisory council, Tuncay Ozilhan, said the business group expected the new finance minister’s economic programme to contribute to macro-stability.
TUSIAD urged Simsek to unveil a new Economic Program immediately, claiming that Turkish business community is weathering the harshest conditions in the last decade.
“We need to replenish the central bank’s reserves instead of strengthening the lira in the event of foreign inflows,” Ozilhan said.
TUSIAD chair Orhan Turan said the real sector had troubles in accessing financing despite the rate cuts, adding that price stability was the first priority for “healthy” growth.
“We need to stop talking about monetary policy, and instead focus on economic transformation and increasing our competitive strength,” he said.
Ozilhan said another condition for improving the economy is to ensure the state of law, echoing critics of Erdogan who say he has bent Turkish courts to his will. Erdogan and his AK Party deny this, reports Reuters.
Noting that investments did not come to Turkey despite the low policy rates, Özilhan said, “We hope that economic stability will be ensured in a short time with the new economy management and that the economy will enter a rapid growth trend. With the appointments that give confidence to the markets, especially the Central Bank, and new reforms to be implemented. We believe that the possible steps of this growth can be taken,” he said.
Emphasizing that the appreciation of TL alone will not be enough to reduce the current account deficit, TÜSİAD YİK President Özilhan said, “The biggest solution to both reducing the current account deficit and fighting inflation is to increase production and savings. It has been observed that increasing consumption without increasing this also increases the current account deficit. We must produce more and invest. In order to increase production and investment, it is necessary to ensure macroeconomic stability, and to strengthen the fight against inflation by ensuring macroeconomic stability.
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