Two mandates for 2018
Apart from reduced growth prospects, 2018 will inherit a number of negative developments from 2017. The acceleration of inflation, high level of unemployment, a huge deficit in the public budget, a rising current account deficit, soaring foreign debt stock and foreign financing challenges for borrowing, all will factor heavily in the new year.
The biggest challenge for a critical year like 2018 will be finding ways to avoid obsessing over issues transferred from previous years, most of which are short term problems. That doesn’t necessarily mean that these problems should be ignored. On the contrary, we will have to no doubt struggle with them. But rather than looking backward only, we will need to implement the global technological improvements needed to succeed in the future.
So I believe it won’t be wrong to call 2018 a double mandate year for the Turkish economy. One of the mandates or missions is to resolve these transferred issues in a short period of time. The second can be defined as taking the first steps of a process to keep up with technological advancements on a global scale and implement whatever the fourth industrial revolution requires.
I believe it’s an achievable goal to tackle both these missions simultaneously. But there will be two key provisions that will make this happen: One is to have a political atmosphere that persuades people to abandon inflammatory and destabilizing discourses. To be able to do that, you have to change the focus of politics. Votes do matter of course but as history teaches us, in the long run political parties lose voters when they rely on these kinds of discourses. I believe such a change will be the most significant move in 2018.
The second provision will involve taking steps that will change the structure and direction of the Turkish economy’s funding allocation. We know that the private sector all but withdrew from investments while industrial investments retreated back to zero. That means resource allocation was radically reversed.
We should immediately prepare an industrial plan with less targets and more government support and start formulating regulations that will provide needed resource allocation from the private and public sectors for selected industries.
I think 2018 will be a key year. We will have to begin solving on-going issues on the one hand while at the same time building the structures needed for the future. If we fail, 2019 will be dominated by a single question: Why do we lag so far behind the rest of the world?