TÜSİAD President Orhan Turan evaluated the Constitutional Court and the Supreme Court crisis: We should not shake trust in justice.

Orhan Turan, Chairman of the Board of Directors of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD), said that democracy, secularism, freedom of expression, justice, gender equality and an education suitable for the 21st century will strengthen the foundation we need. He emphasized that democratic standards should be raised, emphasizing what he believed would improve the situation.

Pointing out that a lot of time was lost in taking the right macro steps in the past periods, Turan said, “I think we will be relieved when we get inflation under control.” We talked about the latest economic developments with TÜSİAD President Orhan Turan.

• We have a local election ahead of us. What should be taken into consideration when going to the election?

We are going through a period where we are struggling intensely with inflation. We must continue this policy with determination. Therefore, it is necessary not to deviate from this policy before the local elections, so that our fight against inflation will not be at risk again in the future. In this sense, the importance of the support that fiscal policy gives and will continue to provide to tight monetary policy is obvious. I think both policies should continue in coordination before and after the election.

WE LOST A LOT OF TIME TAKING THE CORRECT MACRO STEPS

• The issue that the real sector has been complaining about the most for a long time is not being able to access credit. When interest rates were low, credit channels were closed. Now, if there is a loan, the costs and interest rates are very high. How to overcome the bottleneck here? What is the current situation of the real rector’s resource needs?

The real sector needs resources in this period, as in every period. We are not an economy with sufficient savings. Therefore, whether for growth or investments, the need for resources is obvious and essential to maintain production. We lost a lot of time in taking the right macro steps in the past periods. We are experiencing the cost of this today and this will continue for a while. Because unfortunately there is no other way to fight inflation. If we give up these steps today and give cheap resources again, no one should doubt that we will face a much deeper inflation problem in the future. I think we will be relieved when we get inflation under control. Our expectation here is that the first half of the year will be a little more difficult than the second half.

IT IS GETTING DIFFICULT TO SURVIVE AS A MANUFACTURER

• We also see in the MTP that inflation will remain high for at least the next 2 years. What are your predictions about inflation? Can you talk about the problems caused by inflation?

High inflation lies at the root of the problems faced by the real sector today. In your question, you said inflation will remain high for another two years, I look at it a little differently. A clear and determined struggle has begun here for the past 6 months. And we expect the decline in inflation to begin from May-June 2024. Therefore, I am not that pessimistic about the next two years, but of course the single digit inflation we saw in the past is still far away. High inflation poses an obstacle to all kinds of development, including productivity growth and even your competitiveness in the global economy. Your share of the world economy is decreasing. And the saddest thing is that the level of welfare has decreased significantly. In an economy where all these occur, it becomes difficult to survive as a producer. For this very reason, we should know that the issue of inflation is a very important issue not only for Turkey but for the entire global economy. A low and balanced inflation level is a must for a healthy functioning economy.

THE MAIN PROBLEM IS HIGH INFLATION

• What are the main problems your members are currently experiencing, and in which areas are the most complaints concentrated?

The consequences of high inflation are the main problem. Of course, not only the business world but everyone is unhappy with the consequences of high inflation. Put aside the cost increases, there is a very unhappy youth and there are also problems on the employment side. Brain drain is also intense. There is also a shortage of technical personnel, which I call the main personnel. When your focus is on these issues, it becomes difficult to concentrate on strategic issues such as productivity increase. At the end of the day, serious problems arise on the development side. In summary, there is a problematic process that starts from the micro side and goes to the macro area. I hope that in the short term, we will be able to leave these behind and focus on much more important issues such as productivity increase, education and qualified workforce, which we should actually focus on.

• In your opinion, what are the most fundamental problems of the Turkish economy and what do you suggest for solutions?

The most fundamental issue in the economy is the capacity of institutions to build independent policies. If your institutions are weak, you can neither increase welfare nor productivity in that economy. This is a chain, each data triggers each other and at the end of the day, an unhappy society emerges.

Likewise, if we were to touch upon the fundamental problem in the economy, this would take us as far as talking about law and education. In addition to ensuring predictability in law, the contribution of human capital to the economy is very important. Because you need qualified human resources when making reforms, while following technological developments, and when creating macro policies. I do not think that healthy functioning can be achieved in any economy without human capital. The basis of the artificial intelligence processes that we talk about a lot today is also an advanced human capital.

WE HAVE BEEN STANDING FOR 6-7 YEARS

• There is a serious contraction in the European market, especially on the export side. Considering the Russia-Ukraine and Israel-Palestine war, what should Turkey do in terms of exports, what steps should it take?

When we look at the development on the export side, especially in the last 6-7 years, I can say that we are stagnating in terms of gaining a share from the world. This issue has two basic legs: one is micro, that is, sectoral needs, and the other is macro, that is, the general health of the country’s economy. We had problems on both issues here, and we still do. In order for you to focus on sectoral issues, the country’s economy must first be relaxed, I mean leaving exchange rate-interest-inflation problems behind. After this, it is necessary to focus individually on which sector needs which structural transformation.

Unfortunately, the situation in Europe appears to be structural, so there is a risk that it may not be so temporary. We have not been able to achieve regional diversification in our exports. What is understood from competitive advantage is the depreciation of the exchange rate. However, this is not so valid anymore. The fact that we do not have a technology-based productivity increase creates a competitive disadvantage. When you are far from technology-based efficiency, this time, the problem is that the labor costs in your labor-intensive sectors have exceeded those of your peers and the regions you compete in, or that you do not have enough branding to provide a competitive advantage in terms of economy. If we cannot solve all these step by step and approach the issue only through the value of TL, we will not be able to get out of this situation.

THE ECONOMY MAY SLOW DOWN BY 2-3 PERCENT

• For 2024; What are your predictions about growth, inflation, unemployment, exports, exchange rate, current account deficit, interest, what kind of risks do you see in these areas?

We expect inflation to decrease in 2024 starting from the second half of the year. There is still excessive consumption. This needs to be normalized so that we can control inflation. We expect the Central Bank to continue its tight stance. Within this tight stance, it is of course possible that the area already opened for investment and export credits will expand. On the export side, as I just mentioned, a rapid recovery next year is very unlikely. But our imports will also slow down. Therefore, we do not expect to have many problems in terms of foreign exchange needs, in this sense, 2024 can pass easily. There is already a common view on TL, real value appreciation is possible. I think interest rates will remain high for a while and the Central Bank will continue to accumulate reserves. The most important risk we see is that the anti-inflation program, which is currently continuing very determinedly, will be interrupted. If we continue here with determination, the economy will probably slow down to 2-3% for a while, but then I guess we will be on a healthier growth path.

• TÜSİAD also constantly emphasizes structural reforms. What do you think are the first 3 urgent items that need to be taken?

We are taking the steps we need to take on the inflation side. But fighting inflation is not enough. In TÜSİAD’s “Building the future with a new understanding” study, we attributed our development to three basic elements. First, we need to ensure human development and competence through education of the quality required by the age. Secondly, we need to base science and technology. Thirdly, we need to make our institutions and rules strong, inclusive and reliable in every field, from the rule of law to democracy, from the economy to the environment. To put it briefly, “people, science, institutions” are three elements that we should never forget in the reform process.

WE MUST RAISE DEMOCRATIC STANDARDS

• We have entered the second century of the Republic. What should be the core values ​​of this century?

As I stated at TÜSİAD’s Republic celebration, we must re-shine “the values ​​that make the Republic a republic”. We believe that democracy, equal citizenship, secularism, freedom of expression, justice, gender equality and an education suitable for the 21st century will strengthen the foundation we need. Our future will be guided by the proper implementation of these concepts.

On the occasion of the 100th anniversary of the Republic, we hosted a series of workshops with the participation of representatives from different segments of society throughout the year. One of the discussion topics was “2. How will we strengthen the Republic and democracy in our century? He focused on the question. It was determined that our Republic had very important achievements such as national sovereignty, equal citizenship, education and equality of opportunity, secularism and women’s rights, but it could not gain the quality of a stable democracy. Gains in topics such as openness of channels for participation in political life, rights and freedoms, equality of every citizen, rule of law, balance and control mechanisms are seen as limited. On the other hand, all democracies in the world are experiencing problems due to factors such as the expansion of the far right’s sphere of influence. All these problems require both traditional political structures such as political parties and different segments of society, as in our workshops, to hold systematic democratic negotiations and conversations. We must raise democratic standards.

IT SHOULD HAVE BEEN SOLVED ON THE BASIS OF JUSTICE

• Do the decisions of the Constitutional Court and the Supreme Court of Appeals regarding the Can Atalay case create uneasiness in terms of the rule of law?

It is useful to remember some basic principles. Everyone is equal before justice, the laws should be applied equally to everyone. There are no contradictions in court decisions, the decisions are binding on everyone. We should not shake trust in justice. The appearance of conflict between judicial bodies should have been resolved on the basis of justice. We cannot say that reaching a point where the right to individual application is not an effective means of application would be good for our country.