Let’s clear the misconceptions
I’ve met a lot of hard-minded people who aren’t open to learning. I have also met those who have tried to design big changes and transformations although their abilities were not sufficient; they all found themselves stranded. The more interesting ones were those who set the roadmap using “false facts.”
Therefore, I will try one more time to set the facts straight. This time it will be in the form of questions and answers. Here we go…
Is it possible to increase exports by preventing imports? No, it is not possible to gain strength in foreign competition in this way. It is given to some companies as a gift. But side effects emerge, such as high inflation.
Does protectionism reduce the current account deficit? No. Turkey has been trying this since 2014 but it has failed and the current deficit instead has broken records. The reason for the decline in the current account deficit is the rapid slowdown in growth. So there’s no success.
Can we reduce imports by placing taxes on the imports of Consumption Goods? No. These goods do not even make up 10 percent of imports. The rest is raw materials-intermediate foods-investment goods. So we have to import in order to produce. Today, if imports are weakening, it is because of decreasing production.
Can the current account deficit increase as growth slows
down? Yes, it could. If energy prices rise rapidly we could pay a serious bill.
If there is no demand pressure, will inflation fall with mone
tary measures? It won’t fall. Since growth will slow down, there will be inflation during stagnation, in other words, stagflation.
If there is no demand inflation, will the “10 percent discount” campaign be effective? Inflation does not fall in this way. Businesses only support the campaign because of desperation. There is cost inflation. We need to drop that.
If the Central Bank sells three times $10 billion, will the currency fall? The Bank does not have sufficient reserves to sell $10 billion three times. Therefore, there is no need to answer this meaningless question.
Does interest create inflation?
Could be. It’s a chicken and egg situation. But the question should be: “What increases the interest rate?” These are the primary causes: Public expenditures, increased country risk and inflation. These are the elements that serve the interest rate lobby, if there really is one.
Are the goals of the YEP realistic? Some of them are realistic, some not.
Will there be public savings?
Not according to the new economy program. The primary surplus target, real interest and growth figures are telling us this.
What kind of a campaign is needed to increase the use of domestic goods? There is no need for a campaign. It will be enough if local companies are ethical and realistic. Leaning on the walls of protection, they should not sell medium quality goods at relatively high prices. They should support R&D. If they continue patiently, the end of the road is peace.
Will exchange rates rise? Are we not tired of this question? Look back. You will find the answer on your own. Let me help you. Take a paper and write down the reasons for the rise of the exchange rate and the conditions needed for them to fall. Then decide which way the scale will fall.
Is Turkey’s most important problem sourcing? No, it’s most important problems are morality and education. Sourcing is easy but the others need time and effort.