Reflections on the Deteriorating Turkish Economy

Reflections on the Deteriorating Turkish Economy

Economic management needs to be based on a scientific reality. Because we all know very well that states with strong economies have a say in the world and that this is an undeniable reality. When we think in this context, the aphorism of our ancestors becomes more important. "Money has no religion!" Isn't this saying exactly for today's world?

Yes, money, in a more general sense, while the economy brings states closer to each other today, sometimes it can even drag countries and societies into conflict as a result of its unfair and unfair sharing. Deteriorating economies make countries ungovernable and displace those in power!

In this sense, it cannot be said that the economic situation of our country is in a very good condition. The inflation figures, which are being watched these days, show a chronic situation. We are struggling with the highest level of inflation after the government took office. Moreover, we all know very well that the figures announced by official institutions are far from what the citizens on the street feel. I guess we are all faced with the situation of "the spear does not fit in the sack"!

Based on the information I have read in open publications, it is possible to count three main reasons for this result. The first is the unstoppable increase in food prices, the second is the increase in energy costs, and the third is the depreciation of the Turkish currency. In the sum of these, what we experience is the phenomenon we call inflation.

On the other hand, when we look at the world in general, inflation seems to have ceased to be a problem for most countries. The number of countries struggling with inflation like us does not exceed the fingers of one hand. So there is something unique to Turkey. Apart from the figures, the fact that the champions of inflation are onions, potatoes and lemons clearly indicates that the issue is specific to Turkey. There is much to write on this subject, but let's leave it to economists and monetary policy experts. However, in summary, unless there is a serious reform in agriculture from production to consumption, and as long as the use of imported inputs and the depreciation of the Turkish currency continues, it seems that there is nothing we can do on this side.

Our second issue is the increase in energy costs. The most important input of production is energy, and energy prices are closely linked to the prices of oil and its derivatives. Especially the turmoil in the Middle East and the fluctuations in China in a global economic order based on China's production capacity have dragged the world into new economic crises and consequently uncertainty. The strained international relations have created a great chaos and even started to be pronounced as the precursors of a great world war. The hawkish attitude of the US on the Iranian issue, the increase in the problems in oil producing countries, especially Venezuela, etc., the fluctuation in oil prices is still continuing. While the US dollar was 8 liras two years ago, at the time of writing this article, the US dollar is 32 liras in our country, and the price of a barrel of oil in the international market is around 80 dollars.

In the meantime, the budget of our country is running a deficit, and the cash needs of the treasury continue to be met with a low exchange rate and high interest rate policy. In addition, the government is thinking about how to collect more taxes from the people in order to save the situation. This means that in the coming days, we, as citizens, will feel the burning effects of the broken economic order in our country even more.

The coming winter will be much more difficult than summer. Unfortunately, the mentality that caused the situation we are in is in power and has no intention of correcting it. It seems to have no power to fix it. If not, it intends to fix what it has broken. Because the power is getting out of hand, therefore, those in power know and see much better than us that they need to fix the economy.

The depreciation of the Turkish currency is already a problem in itself. Accordingly, the increase in inflation is going head to head. However, conditions have changed in the world. Money has turned its direction from developing countries to developed countries. In other words, money has turned its direction to its home, where it came from. This is why we cannot find hot money from outside! It is no longer in the hands of us Turks to stop and change this intellectual change. However, if the rulers of our country had not sacrificed the issue to domestic politics in the face of this bigger challenge, it might have been possible to minimise these burning and destructive effects.

I-know-everything ego is one of the biggest reasons why we have reached the current situation. When money was abundant, our dependence on imported raw materials reached its peak. We buried the money only in concrete and its derivatives. In other words, even the increase in production, which could be seen as a solution to reduce inflation, has ceased to be an option for Turkey due to the depreciation of the Turkish currency and the import dependence on intermediate goods in production. At this stage, the steps that can be taken to bring inflation back under control are quite limited. Because we have delayed a lot. While we were wasting time waiting for an intervention, the effectiveness of the interventions disappeared. In other words, in order to ensure price stability, as in every economic indicator, there are now issues that we can control and issues that we cannot control, which are beyond our control. The trick was to minimise the negative impact of those that we could not control by making the right moves in the matters under our control. However, we did the opposite.

We have to start taking steps that will ensure foreign exchange inflows to Turkey, thus revaluing the Turkish currency, but at the same time transforming critical areas of the country, especially agriculture and industry, in the medium and long term, face a bitter prescription, and then pray that the conditions will improve in our favour. Is the situation that bad?

You may not feel it yet, but every day we see that "It is getting closer!"