“We Agreed to the Interest Rate Increase, Neither Inflation Dropped nor Capital Arrived”

Ankara Chamber of Industry (ASO) President Seyit Ardıç said that they agreed to increase the policy interest rate in order to reduce inflation and eliminate uncertainties, but they have reached a point where inflation has not decreased and foreign capital has not arrived. According to the news by Hüseyin Gökçe from Ekonomim; Ardıç warned that inflation accounting would turn into a wealth tax and noted that monetary tightening policies did not yield the expected results.

At ASO’s April Assembly meeting, President Seyit Ardıç made evaluations regarding current economic developments.

ASO President Seyit Ardıç, who started his speech by celebrating April 23 National Sovereignty and Children’s Day, stated that the basis of freedom, equality and justice is national sovereignty.

“LIMITATION OF COMMERCIAL CARD LIMITS PUT INDUSTRIALISTS IN A DIFFICULT SITUATION”

Seyit Ardıç stated that the uncertainties in the economic structure caused the production power of the industrialists to decrease and that the industrialists, who were affected by high interest rates and uncertainty, agreed to increase the policy rate with the aim of reducing inflation.

On the other hand, Ardıç underlined that the expected results were not achieved in monetary tightening policies and said, “Our economy is currently stuck in the grip of both high interest rates and high inflation at the same time. “This process erodes our competitiveness in international markets.” said.

Stating that the limitation of commercial credit card limits, as well as the difficulty of accessing credit, puts industrialists in an even more difficult situation, Ardıç said, “Commercial credit cards have an inflation-lowering effect as they contribute to the supply side rather than an inflation-increasing effect.”

“THE SUPPLY SIDE MUST REMAIN ALIVE FOR MACRO BALANCE”

Stating that the supply side of the economy must remain alive in balancing many macro variables, especially inflation, Seyit Ardıç said, “In this period when it is difficult to access credit, postponing or paying tax debts in installments is of vital importance for the real sector to continue production and survive.” he said.

“INFLATION TAX TURNS INTO WEALTH TAX”

Stating that businesses need external resources because their equity capital is insufficient, Ardıç stated that, on the other hand, they are forced to pay inflation tax on the increase in assets by borrowing. Pointing out that this tax, which will be levied on inflation accounting, will essentially turn into a wealth tax, Ardıç said, “Taxing the increased value of an asset that is not subject to trade but is included in the asset due to inflation will bring an additional cost to us, the industrialists.”

Ardıç requested that the inflation adjustment be applied tax-free in the 2024 provisional tax periods, as it was in 2023.

“HOW WILL THE EXPORT TARGET BE REACHED WHEN INDUSTRIALISTS CANNOT GET A VISA?”

Pointing out that there are problems in exports because many industrialists cannot obtain visas, Ardıç reminded the export target of 305 billion dollars and said, “How is this target expected to be achieved without the industrialists being able to open up to new markets, exhibiting and marketing the product at fairs? “Our visa problem has now become much more important than the financing problem,” he said.

“HIGH INTEREST DOES NOT ATTRACT CAPITAL, BUT NEGATIVELY AFFECTS INFLATION DYNAMICS”

Emphasizing that the current high interest rate applied to meet the demand for foreign exchange does not attract foreign capital and also has a negative impact on inflation dynamics, Ardıç said, “For foreign investment, especially direct investments; “It is very important to manage expectations effectively and rebuild trust,” he said.

Stating that foreign capital inflows can accelerate with the implementation of the current policy supported by coordinated and structural reforms, Seyit Ardıç said, “The creation of a stable exchange rate and low inflation environment is of critical importance for long-term foreign capital inflows.”

Stating that it is important for unemployment to reach single digits, Ardıç stated that, on the other hand, the human capital produced cannot be used correctly. Seyit Ardıç stated that Turkey is the only country that believes that if you do not go to university you will remain ignorant.

“ONE IN 4 OF THE POPULATION HAS RECEIVED HELP”

Talking about the information in the 2023 activity report of the Ministry of Family and Social Services, Seyit Ardıç said that the number of social assistance recipients increased by 2.3 million people, reaching 19.9 million. Stating that almost one fourth of the population has now received aid, Ardıç stated that the number of households receiving social aid has reached the 5 million threshold.

Ardıç stated that the social aid provided to the working population causes them to become accustomed to laziness, causing the society to move away from employment.

“INFLATION IS 12 TIMES THAT OF OECD”

Stating that while the average inflation in the OECD is 5.7 percent, the inflation in Turkey is approximately 12 times this, Seyit Ardıç said that the suitability of the policy choice to reduce inflation by reducing demand for the Turkish economy is controversial.

Stating that household consumption expenditures are not the only component of demand, Ardıç said, “One of the most important components is public expenditures. “In order to enter a healthy inflation path, public expenditures need to be cut rather than consumption expenditures,” he said.

“ADDITIONAL BUDGET SHOULD NOT BE APPLIED FOR FINANCIAL DISCIPLINE”

Underlining that an additional budget should not be used to ensure a stable financial discipline, Ardıç said, “Since the additional budget has an effect of increasing expenditures and income, it will cause new costs to arise in both the public and society.”

Reminding that the Central Bank declared in its inflation letter not to increase workers’ wages, Ardıç said, “In addition, a declaration of will to reduce public expenditures will give better results in the fight against inflation.”

“Türkiye IS PROVIDING A TRIPLE DEFICIT”

Turkish economy; Stating that it has a triple deficit of savings, budget and foreign trade, Ardıç suggested that a comprehensive economic program be put into effect in addition to the existing realistic economic policies focusing on these issues.

Stating that the economic program should be shaped with a multifaceted approach, taking into account international factors and social dynamics, Ardıç said, “In addition, a participatory approach should be adopted during the implementation of this program, the opinions of different stakeholders should be taken into account and social consensus should be achieved with common sense.”

Emphasizing that it has become a necessity to focus on the economy in the coming long period without elections, Ardıç said, “Our country has emerged stronger from the turbulences it has experienced before. “We have full confidence in the economic management, we believe that these negativities will be eliminated as soon as possible and our economy will regain stability.”