With the spread of the Covid-2019 epidemic, which emerged in China in December 19, to the whole world, human life was adversely affected in every aspect. While the countries of the world took various measures to control the disease, the mandatory restrictions brought economic difficulties.
After stopping international travels, closing customs gates and curfews, the biggest disadvantage was reflected in consumption, which is one of the cornerstones of the economy. As demand decreased, production slowed down within the scope of restrictions, and the factories came to a standstill by working at a minimum level. Therefore, there was a serious change in the supply side, which is the other cornerstone of the economy. In the light of these developments, the real economy started to go towards a serious contraction. The fact that the factories work less than normal, the decrease in human mobility, the slowdown of consumption in each sector at certain rates also affected the commodity markets, which is the subject of interest in this study, and caused a significant crisis. Although the restrictions have been lifted, the Pandemic unfortunately continues and the commodity crisis continues to grow like an avalanche, with the biggest record in recent years. Anticipating the bottleneck that industrialists may experience EGİAD – Aegean Young Businessmen Association discussed the “Commodity Crisis” with the participation of all non-governmental organizations. Yaşar University Faculty of Business Faculty Member Assoc. Dr. Umut Halaç was the guest with his research and evaluations.
Commodity prices, which broke records with supply bottlenecks, EGİADIt was evaluated in detail with the participation of BASİFED, EGIFED, İZSİAD and ESİAD. Commodities, exceeding the levels last seen in the super cycle in 2011, once again dealt a blow to the economy, which was shaken by the pandemic. Data from the manufacturing and services sector showed that the global economic recovery is starting to catch on with bottlenecks and inflationary pressures from commodity prices. The opening speech of the meeting, where the subject was evaluated by the business world, EGİAD Alp Avni Yelkenbiçer, Chairman of the Board of Directors, stated that all producers in the Euro Zone, China, throughout Asia and the USA, where Turkey's largest export markets are located, are suffering from the same problem and that all countries of the world are facing a commodity crisis.
Crisis Like Domino Effect
Pointing out that the supply bottlenecks that have been growing since the beginning of the pandemic and the resulting rise in commodity prices to the highest level since 2011 are a hindrance to the global economic recovery, Yelkenbiçer said, “From the increasing raw material prices to the lack of components such as chips, from the density at the ports to the lack of personnel working in the logistics sector. Problems in the supply chain continue to be one of the biggest problems in front of the global economy. We will be leaving 19 years behind in the pandemic caused by the Covid-2 virus worldwide. In March-April-May 2020, the world took protection against the virus. We closed in the houses, the wheels in the industry stopped. As the wheels started to turn again in June, the supply could not keep up with the accumulated demand. Supply-demand balance could not be achieved in the world. While the exporter had difficulties in finding raw materials to produce the products to be exported, despite all the difficulties, he could not find a container to send his product when he made his production. When he found a container, he was faced with astronomical freight prices. While maritime carriers concentrated on the China and USA lines as it was more profitable during the pandemic period, there were disruptions in the distribution and return of the containers reaching the ports in the USA due to the heavy pandemic in the USA. China quickly took steps to disrupt the world container traffic in its favor. This disrupted the rhythm of trade. All these successive events actually inhibited world trade like a domino effect.”
Pointing out that there is a serious increase in commodity prices, Yelkenbiçer said, “There is a strong increase in commodity prices with the help of trillions of dollars of government incentives and the demand from China, the world's largest raw material consumer. "According to analysts, this is the beginning of the fifth round of bullishness in the commodity since the 19th century," he said.
Yaşar University Faculty of Business Faculty Member Assoc. Dr. Umut Halaç started his speech by stating that the crisis can be both a disease and a balm. He summarized the main causes of the commodity crisis in terms of the World and Turkey. Halaç spoke as follows: “When we look at it from the world perspective, the causes of the commodity crisis are; pandemic, economic policies chosen after the pandemic, drought, disruptions in logistics services. When we look at it from Turkey's point of view, preferred economic policies can be listed as exchange rate mobility and inflationary pressures. Drawing attention to the fact that price increases lead buyers to stock up, and the problem of financing sources arises, Halaç said, “There are great problems due to the lack of supply, changes in exchange rates, changes in trade routes and different ways of doing business. It seems that these problems will not improve in the short term. Turkey's situation can be explained by Dependent Financialization. We can say that Turkey can still complete 2021 with its current performance, with a growth rate of 5 – 5.5 percent. This growth may also take place in the first quarter of 2022, but we may encounter both inflation and stagnation as of the second quarter. The way in which the crisis strategy is determined in our country has changed. Problems are approached with shorter-term policies, which is not a good thing. The only exit is considered to be economic growth. "As long as economic growth is not distributed fairly, it can be a problem for anyone," he said.
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