Turkish economy needs stable growth: Business body head

By Muhammed Ali Gurtas

ANKARA

The Turkish economy needs to show a balanced growth performance with a healthy slowdown, according to the head of the Turkish Industry and Business Association (TUSIAD) on Wednesday.

Speaking at Anadolu Agency's Finance Desk, Erol Bilecik said one of the most crucial issues of the private sector is to minimize costs, and now a new structure of economic management is in place under the presidential system offering opportunities.

"Rapid decision making will be the most important side of the new presidential system," Bilecik said. "One of the important features of simplification [of bureaucracy] is speed, which brings efficiency and lower costs."

Following the June 24 general elections, Turkey officially switched to a new presidential system of government. The Cabinet reshuffle saw economy-related ministries cut to nearly half; the new economy management model has three pillars -- production, finance, trade -- with a focus on growth and clarity.

Bilecik said all players in the ecosystem should express their opinions and discuss the issues adequately during the decision-making process.

"This is one of the essential expectations of the business world," he said. "Because consultations that are held after decisions have been made do not cause anything but a waste of time."

Bilecik said volatility of exchange rates is affecting the Turkish business world while higher interest rates are also causing a loss of appetite for investments.

"Far ahead of these two, the biggest problem of the business circle is inflation as it reduces predictability," he said, noting that the rise in consumer prices has exceeded reasonable levels.

Bilecik also said the Turkish economy overheated last year and witnessed a period in which the inflation rate rose significantly.

"We need to start a soft landing, because sudden brakes will definitely cause troubles," he said. "We need a healthy slowdown and more stable economic growth."

- Meeting with finance minister

According to the country's statistical authority, the Turkish economy grew 7.4 percent last year while it expanded 3.2 percent in 2016. From January to March this year, the economy also recorded a high growth with 7.4 percent.

Bilecik said the numbers alone make everyone feel good and the contribution of the growth can be seen in the employment side.

"However, looking at macroeconomic stability with this 7.4 percent growth, there is a process falling back in various parameters," he said.

Consumer prices in Turkey increased by 15.39 percent in June compared to the same month last year while the annual inflation rate was 10.35 percent this January.

The average U.S. dollar/Turkish lira rate this January to July was 4.20 while one dollar traded for 3.65 liras on average last year. The exchange rate hit its all time high by reaching over 4.90 last month.

Currently, the one-week repo rate -- Turkish Central Bank's policy rate -- is at 17.75 percent. In June, the bank raised the policy rate by 1.25 percentage points from 16.50 percent, but it kept the interest rates constant at its sixth Monetary Policy Committee meeting last week.

Bilecik also noted that there is a need for well-designed economic program for the coming period and the country can feel better with the introduction of new program this month instead of waiting for September, if possible.

About the meeting between Turkish business people and Treasury and Finance Minister Berat Albayrak last month, Bilecik said: "It was quite critical to hear from him that the communication with business circle will be his priority.

"Mr. Albayrak said that he will soon announce a new economic program which is already highly expected. We are pleased to see the minister prepared well although he had a very short time since he started his new duty.

"It is time to realize the speeches, that is the main point, and from now on we will track the process."