Turkish manufacturers squeezed and expensive

For 37 years as a carpenter, Ahmet has faced many economic hardships in Turkey. But nothing has been as difficult as he has been experiencing these days, due to rising prices and the weakening of the lira disrupts his small business.

“Income has skyrocketed so much that we can’t afford it,” said the carpenter, who manufactures kitchen cabinets, cardboard doors and doors from his office in Ankara, the Turkish capital.

“Before the plague, chipboard – which we had installed – was 94 lira [per panel]. Now it is 380 lira, “said Ahmet, who asked to be identified by his first name.

Rising consumer prices, which in October stagnated at an annual rate of 20 percent, have dominated the issue of Turkish opposition parties and the media because of the impact on disadvantaged families.

But for businesses, speeding up is the worst. The country’s inflation rate rose by 46 percent annually in October – the worst in 19 years for President Recep Tayyip Erdogan, a warning sign that consumer inflation is expected to decline.

However, the central bank, which has faced a major overhaul of Erdogan, is expected to lower its interest rates on Thursday even though the curve – down 28 percent against the dollar since the beginning of the year – has entered a new record. low. In recent days it has been selling for more than 10 dollars.

Erdogan is an anti-interest rate activist and has repeatedly pushed the central bank to lower interest rates to boost growth, despite warnings from economists that rising inflation could lead to a collapse.

Selva Demiralp, professor of economics at Koc University of Istanbul, said that as a major exporter of energy and commodities, Turkey had already experienced the effects of rising global prices due to rising oil and gas prices, disruption of international chains and travel. ahead. survival stability after coronavirus closure.

“Unlike the rest of the world, our central bank is not really helping because high commodity prices are increasing and lowering slightly to reach higher prices,” he said.

Some experts have asked questions about the differences between manufacturer and consumer prices, which have been closely linked, among other issues that Turkish officials could confuse. cheap consumer data, which he refuses.

These differences can be explained by a few businesses that choose to take over some of their priorities for fear of undermining consumer demand.

“We can show half the price going up [in the costs quoted to customers], ”Says Ahmet, a carpenter. “We do the job at a loss or cost sometimes, because of the cost. People come to ask for the price and when they hear it they don’t believe it.

The big companies, too, have been looking for a “good place” on the prices, says Mustafa Gorkem Elverici, chief of glass manufacturers who publicly listed Sisecam. “We have the market power to showcase [rising input costs in] prices – that’s our chance. But the more you show them, the less likely they are to lose their relevance. ”

Foreign exporters such as Sisecam can seize the most sought after opportunities in Europe, Turkey’s most important market.

Large companies “have” water-repellent tools “, such as the use of barriers to protect against rising inflation and inflation, according to Ece Mandaci, an expert on the consulting team at Istanbul Unlu & Co. They were also able to promote the rise in consumer spending for their clients, add, and save money by reducing costs since the epidemic began.

Exports of exports, which increased by 60% per annum in the second quarter of 2021, are expected to increase the growth of all household goods to 9 percent this year.

However, Tusiad, a trade union whose members account for 85 percent of foreign trade, including energy, called on the government to prioritize rising inflation rather than short-term growth.

Gizem Oztok Altinsac, the group’s financial analyst, said concerns about rising prices – and the resulting economic instability – mean that the recent slowdown in the central bank has not turned into cheap business loans. He added that, while manufacturing growth in Europe was declining and domestic demand was declining, “there is a big question about the stability of current growth”.

Meanwhile, small businesses and entrepreneurs are already tired.

“How is our business going? I can’t cry, “said Fatih, a hotel laundryman.” It’s very difficult. “

“Every day the price of our goods increases. One day is gas, the next day water, the next day power, cleaner, gas. Good bags [clean laundry] was 12 lira at the beginning of the plague. Now it is 30 lira. “

Like many businesses, Fatih is expected by the government to announce a sharp rise in the minimum wage – set at a TL2,800 ($ 270) monthly homecoming price – early next year. He does not know how he will be able to pay his nine employees if, as most people expect, the rate has increased by 25 or 30 percent.

“Small businesses are in big trouble,” he said. “We think twice about any money we spend.”