Cumhurbaşkanı Başdanışmanı Cemil Ertem ile Özel Röportaj - Seda Akbay 'Ekonomi Meydanı' (27.03.2021)

We already see the economy. Looking at Turkey's economic indicators, for example, January industrial production came in at 11.4, one of the highest in recent years. Capacity utilization rates are at 74-75%, which is good. Despite the pandemic, Turkey's economy grew 1.8% in 2020, contrary to expectations. We have problems with inflation and unemployment, but these are global issues. The world is going through an economic fluctuation, as seen with the Suez Canal blockage. This shows how fragile global economic balances are. Turkey's debt ratios are much lower than developed countries. Central banks worldwide are struggling to achieve inflation and growth targets despite negative interest rates. In this context, Turkey's economy is experiencing some volatility, but we should not ignore the positive aspects. The uncertainty is partly manufactured by some channels, creating panic. We need to talk about the real facts. The change of the Central Bank governor caused a spike in exchange rates, with the dollar above 8 lira. Do you think this volatility will continue next week? I think the short-term volatility will end because Turkey's macroeconomic data is solid. The change of the central bank governor is not the only reason; global factors like the rise in US bond yields also affect emerging markets. Turkey has taken measures to limit foreign currency borrowing, and the sectors' foreign currency positions are not excessive. Despite the decline in tourism revenues, exports are recovering. I believe this volatility is very short-term and will settle. What is the basis of this?

First, the call by President Erdoğan for citizens to bring gold and foreign currency into the system is very important. But the main basis is Turkey's economic data: increasing exports, industrial production, and the central bank's policy framework. The central bank's monetary policy is determined by law, focusing on price stability and inflation targeting. The change of governor does not change this framework. The central bank will continue to make decisions based on data. I do not expect major changes. The banking sector is strong, with low non-performing loan ratios. Public banks have provided significant credit expansion. For example, VakıfBank recently completed a syndicated loan of $1.75 billion with participation from 7 major banks worldwide, showing confidence in Turkey's export potential. Turkey has no balance of payments problems, and short-term foreign currency debt is manageable. The central bank's independence in instruments is maintained. The excessive discussion of the governor change is just gossip and does not reflect economic reality. We should focus on production and real economic issues. Turkey's health system performed excellently during the pandemic, attracting people to come to Turkey. The economy is fundamentally sound, and I foresee sustainable growth of around 5-6% by 2023.

As I said earlier, the central bank's policy framework does not change with the change of governor. The central bank will continue with its inflation targeting framework. It will look at data and make decisions. We cannot predict the next MPC decision. Speculation should be avoided. The new governor, Şahap Bey, said the meeting will be held on time. So there is no need for unnecessary expectations. I do not expect major changes.

I don't have figures at the moment. But at these levels, a solution could be possible. As Turkey's economy gains strength, the attractiveness of the Turkish lira will increase, and in the medium term, the dollarization issue can be resolved. The use of the Turkish lira in transactions indicates a serious depth and process. We are not facing such a situation. But of course, bringing the Turkish lira to the forefront is our preference. As the economy becomes more secure and production increases, this will come. Also, President Erdoğan's economic program focuses on production, investment, exports, and employment. The fight against inflation is important, but structural measures like increasing production and high value-added investments are key. Public banks will play a crucial role. The reform package will address food inflation and supply chain issues. We should talk more about these real economic issues rather than just exchange rates and interest rates.

Thank you. Good day.