EGİADThe meeting on “ÜNLÜ & Co 2022 Economy and Market Expectations”, in which ÜNLÜ & Co Research Department Senior Manager Gökhan Uskuay was a guest speaker, was held with the participation of the business world. Unlu & Co 2022 Strategy Report and Market Expectations were also discussed at the event, which was held as an online webinar.
The economic agenda was discussed with the webinar titled “ÜNLÜ & Co 2022 Economy and Market Expectations”, where ÜNLÜ & Co, Turkey's leading investment services and wealth management group, provided information and evaluations. In the webinar, where ÜNLÜ & Co Research Department Senior Manager Gökhan Uskuay was the guest speaker, the effects of the global economy, the recent changes in the Turkish economy and their effects on the markets were discussed. To the meeting held via Zoom, EGİAD, ESİAD and İZSİAD member business people showed great interest.
WE MUST ENSURE THE SUSTAINABILITY OF OUR COMPANIES AND PROTECT EMPLOYMENT
EGİAD General Secretary Prof. Dr. The opening speech of the meeting was moderated by Ali Fatih Dalkılıç. EGİAD Alp Avni Yelkenbiçer, Chairman of the Board of Directors, started his speech by addressing the effects of the informal economy. Yelkenbiçer said, “One of the most obvious symptoms of economic crises is the increase in unemployment. According to this approach, there is no unemployment-oriented economic crisis in Turkey yet, but there are some critical points that need to be examined in terms of the 50 percent increase in the minimum wage. Informal work, which deprives employees of basic rights such as social security, retirement, legal working hours, and the state from tax revenue, is one of the main problems of the Turkish economy. Although there has been a significant decline in informality, especially in the wage-earning sector, in recent years, Turkey continues to be one of the countries with the highest rate of informal employment among OECD countries. Various studies reveal the existence of a negative effect of minimum wage increases on informal employment in general. In the context of Turkey, the few studies investigating the similarly sized minimum wage increase in 2004 also detect the effect of informality.
Emphasizing the importance of reducing inflation and volatility in the exchange rate, that is, ensuring that it is predictable, Yelkenbiçer said, "Looking at the employer's side, it can be predicted that due to the increase in input costs due to the increase in foreign exchange rates and the shrinking market, especially small enterprises may have to move forward with negative developments such as layoffs. At this point, it would be appropriate for small businesses to be supported by creating different financing resources such as social security support, employment support, increase supports related to credit limits, in order to avoid undesirable situations such as layoffs. It is clear that there is a need to review the monetary policies related to the fight against inflation and the exchange rate. Otherwise, it will not be possible to prevent the increase in the rate of increase in the face of inflation.”
PRODUCTION POLICIES PRIORITIZING HIGH TECHNOLOGY AND ADDED VALUE FOR EXPORT-FOCUSED GROWTH
Mustafa Karabağlı, Chairman of the Board of ESİAD, emphasized the importance of the need for a real structural transformation in industry and foreign trade for the success of the new economic model, which aims to increase exports and reduce the current account deficit. Karabağlı stated that production policies that prioritize high technology and added value and that will reduce imported inputs should be followed, “Turkey's exports reached a historical record level of 2021 billion dollars in 225,4 with the base effect. The annual rate of increase was 32,9 percent. Imports, on the other hand, amounted to 23,6 billion dollars with an annual increase of 271,3. Aegean Region, with an export of 2021 billion dollars in the first 11 months of 22,3, constitutes 11 percent of Turkey's exports, while İzmir accounts for 13,4 percent with an export of 6,6 billion dollars. However, the advantage gained in exports due to the break in supply chains with Covid 19 and the shifting orders from China may be temporary. In addition, although it is thought that the high exchange rate in our country may be positive for exports, it is a fact that it is temporary, the competitive conditions destroy the emerging advantage in a short time and the real income obtained in total in foreign currency is not fully reflected as an increase. On the other hand, considering that the needed raw materials and intermediate goods are imported, it is possible that the high exchange rate may lower the industrial production index. Unless high inflation is prevented and a balanced and stable exchange rate is not reached, there is a risk of a decline in industrial production and thus in exports. Investment decisions are delayed due to the current economic situation. In addition, uncertainties created by practices such as Turkish lira-settled forward foreign exchange sales to exporters and importers and selling 25 percent of the export value to the Central Bank make both producers and exporters uneasy. The issue of how much resources will be transferred to Eximbank and rediscount loans is also important.
AN EFFECTIVE COMBAT WITH INFLATION IS A CONDITION
Later, İZSİAD Chairman of the Board of Directors Hasan Küçükkurt started his speech by saying that interest and inflation constitute the most important economic agenda of 2021 in Turkey. Küçükkurt pointed out that while it is generally accepted in the world that interest rate increases are the main intervention method in the fight against inflation, it is preferred to follow a different path in Turkey. Küçükkurt, accepting that by lowering the interest rates will move the markets, investment will increase, and this will reduce inflation, reminding that the interest rate cuts carried out by the Central Bank caused the foreign currency to accelerate upwards, "Following this, the inflation that already existed in the global markets has rapidly increased in our country. Although the low interest policy raised the foreign exchange rate and encouraged exports, creating a positive outlook, high foreign exchange and Producer Inflation, which almost doubled the CPI, caused us to enter a difficult process for our industry and producers, which are in need of imported intermediate goods. For this reason, our production cost increased and we started to have difficulties in accessing financing and pricing due to unpredictability. Even though the sharp increase in the foreign currency was stopped and the foreign currency was brought back to a certain level with the recently issued currency-protected deposits, the December inflation reached a record level, bringing our annual inflation to 36 percent,” he said. Warning that 2022 will be a difficult year, Küçükkurt said, “I think that a difficult year awaits manufacturers who are trying to see their way with high inflation in this process. Likewise, it is a fact that this level of inflation will be extremely challenging for consumers. What the business world expects from politics is the creation of a predictable and sustainable economic environment integrated with the global economy, fulfilling the requirements of economics. We maintain our expectation and desire for a Turkey that is integrated with the world, glorifies democratic values, inspires confidence in international markets, and provides liquidity for investment, not speculation. It is our duty to create a Turkey that is grounded, sees ahead and enters a production climate. I maintain my belief that 2022 will be a relatively reasonable year if the right policies are implemented and tried and fruitful steps are taken in the fight against inflation. But otherwise, I think it is inevitable to see Turkey in a spiral of inflation and high foreign exchange in 2022.
After the brief company introduction by ÜNLÜ & Co İzmir Branch Director Onur Kayral, ÜNLÜ & Co Research Department Senior Manager Gökhan Uskuay made a detailed presentation on the economic balances of the world and Turkey. He noted that the imbalance in commodity prices will come to an end this year. Stating that the world closed 2021 with a growth of 6.1 percent, China had the biggest increase, Uskuay stated that this rate of increase is expected to be 2022 percent and 2023 percent in 4.7 and 3.5, respectively. Making a detailed assessment of the Turkish economy, Uskuay said, “Commodity prices will no longer be a problem in the next year. We are facing the highest inflation since the 1980s. Inflation rose due to both demand and supply shocks. With the normalization in the supply chain, there will be some normalization in inflation. In 2022, there will be a peak and a fall in the first 6 months. In 2022, the highest negative real interest rate in the world will be seen in TL. The interest rate hike processes of the G-7 Central Banks and the quantitative tightening of the FED will complicate the financial conditions abroad. The CBRT will try to increase its reserves with heterodox policies, and will defend the exchange rate with primary policies. TL experienced one of the biggest depreciation of the last 20 years. In order to break the dollarization trend and to stop the depreciation that stabilized in the TL, domestic individual investors were guaranteed exchange rate returns. In 2022, there is an expectation of 4 percent growth for Turkey and 45 percent of inflation," he said.
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