Inflation Is On Target Again

We left behind an active and innovative June.

In the elections in May, the Turkish Grand National Assembly, the temple of our democracy, set sail for intensive work to grow our country with our newly elected deputies

President Recep Tayyip Erdoğan was re-elected to the Presidency with the confidence of the majority of the voters in the second round of elections.

Significant changes were made in the rapidly established new Government that were of great interest to us. The economy was entrusted to Mr. Mehmet Şimşek. Hafize Gaye Erkan assumed the Presidency of the Central Bank.

Thus, the winds in the economy began to blow from the other direction. The Central Bank made a u-turn in its decision to cut interest rates at every meeting for months, and the one-week repo auction interest rate, which is the policy rate, was increased from 8.5 percent to 15 percent.

On the other hand, the freed exchange rate also showed a rapid increase. It has now reached the levels expected by our exporters.

The statements made by the economic management emphasize that a certain road map has been drawn and that this path will be proceeded with confident steps that do not deviate from the line, albeit slowly. The Money Market Board announced that it has “decided to start the monetary tightening process in order to establish disinflation as soon as possible, anchor inflation expectations, and control the deterioration in pricing behavior.

“We industrialists care most about financial stability for the continuity of investment and production. We see the decision taken by our Central Bank as a step towards establishing and maintaining financial stability, and we support efforts to achieve this. Our expectation is to reduce risks and ensure predictability with the new economy program to be implemented in the second half of the year.

In addition, we are pleased that our first problem is to pursue a determined policy to reduce inflation, and to emphasize the target of reducing inflation. Because high inflation melts both the income and profit obtained in our businesses. The biggest risk on our economy is inflation.

One of the issues I would like to mention is the increase of the minimum wage by 34 percent to 11 thousand 402 TL net and 13 thousand 414 TL gross. The employer cost is 15 thousand 762 TL. Congratulations to our new employees. Of course, we are also aware of the constant erosion in wages in an environment of high inflation. However, I would like to emphasize that the share of wages in costs is constantly increasing. I consider the continuation of the practice of increasing the minimum wage support to 500 TL and not collecting taxes from the amount up to the minimum wage as inadequate but positive decisions.

I would also like to mention about exports. We completed the month of June with 20.9 billion dollars of exports.

We are 10.5 percent negative compared to the same month of last year, but we should not forget the 9-day Eid holiday. Our industrialists in every corner of Turkey are trying to reach their export target to every corner of the world by producing non-stop. We have already taken our place in the great march that was started for the rapid transition of our country’s economy to a stronger, sustainable, safe and open period for investments. TIM’s “Top 1000 Exporters” survey included 31 of our participants. Let’s move forward together with joy and happiness.

I wish all my industrialist friends happy and productive  days.

Eyüp SÖZDİNLER
COIZ Chairman of the Board