Aegean Business World: 'The Key Concept of 2023 Will Be Election Economy and Austerity'

EGİAD President Yelkenbiçer: The two key concepts of 2022 are inflation and energy prices; And 2023 will be election economy and austerity. In 2022, there was a rapid increase in inflation, but on the other hand, demand remained alive. From the point of view of economic theory, the demand for goods with increasing prices should decrease. However, the opposite is happening in our country; Although prices increase rapidly, the demand for goods with rising prices also increases. In such an environment, since investing money in the bank will create a loss of purchasing power, large savers tend to buy real estate, stock market, and change their vehicles, while small savers tend to buy and stock goods that they think will increase in the future, and partially turn to the stock market. Due to this interest-inflation inconsistency, there is a kind of money escape process and this process further fuels inflation.

Some of our citizens were trying to buy foreign currency in order to protect the principal, but when banks started to be penalized for holding foreign currency deposits, the demand for foreign currency decreased as the banks directed their customers to different areas. The abnormal rises in the stock market in recent months are entirely due to this reason.

Individuals who have never invested in the stock market before, when they see that they cannot earn return from interest and cannot protect their capital, tend to invest their savings in stocks, and therefore the values ​​of the stocks, and therefore the BIST 100 index, increase. The stock market is going up, meaning the economy is doing well is not realistic when you think about it that way. When the day comes and the interest has to be raised to the level of inflation, the stock values ​​and real estate prices in the stock market will experience rapid collapses this time. We have always underlined the opinions we gave this year, it is useful to emphasize again; Our interest rate policy is unrealistic.

Election economy in the first 6 months, structural reforms in the second 6 months

We cannot deny that there is an economic crisis in the whole world, but we see that the fight against inflation has become the basis of economic policy in developed countries. As of July 2023, we expect Turkey to inevitably implement an anti-inflationary policy after the election results. Looking at 2023, the electoral economy of the first half of the year; I think the second half will be a period of austerity, in which long-term solutions to economic problems will be produced. In the part that I call the election economy, the EYT law will probably be enacted, and the salaries of approximately 10 million pensioners will be increased. It is possible that there will be two minimum wage hikes until the elections, which means that we will enter the elections around the psychological limit of approximately 2 TL.