Turkish business boom over Erdogan’s economic laboratory collapse

Ideally, Turkish businessman Vahit Yilmaz should benefit from a weakened lira: imports flooding Turkey’s $ 30bn trade in textiles and clothing after the destruction of the lira reduced the cost of production.

But there was only a 50-50 chance that his clothing business would survive for the next 12 months, he said. The price of textiles, yarn and other inputs, all worth a dollar, has gone up, and homeowners like Yilmaz in Merter, an Istanbul district ready to wear, are preparing for winter.

“All Turkish fabrics are free at the moment,” said the 35-year-old. “Business was good when the dollar went up slowly.

Recep Tayyip Erdogan has led a 50 percent reduction in inflation since the beginning of the year when he ordered the central bank to cut interest rates on a double rate despite rising inflation. Thursday, central bank reducing prices for the fourth consecutive month. The lira also dropped 7 percent on Friday to TL16.8. It fell by one-fifth in the month just after a 29 percent fall in November. Turkey’s president has said the low cost will help the country’s 83m people to enjoy export, retail and job creation.

But opponents of the president say he is handing over the country to a a major economic experiment. Durmus Yilmaz, a former governor of the central bank, said this month that he would turn Turkey into a “crackpot-based laboratory”.

In recent months, after Erdogan introduced another approach to mitigation, he also mentioned China’s economic transformation after the 1978 revolution as evidence that his example would bear fruit.

But Ali Akkemik, a Chinese and Turkish economist at Yamaguchi University in Japan, said that while it was true that Beijing reduced its investment rate in the 1980s and 1990s, it set up a clear “industrial vision” that was more important. its transformation into the second largest economy in the world in decades.

“Turkey does not have a clear corporate policy,” he warned. “We don’t know which companies want to promote.”

A London-based banker who specializes in both finances has asked for anonymity. “It is economically unreasonable to think that the country can only export with foreign exchange due to inflation,” he said. “If that were the case, Zimbabwe would be a state of the art.”

Erdogan’s determination to push for a reduction in prices despite widespread frustration from voters and businessmen has sparked speculation in Turkey that some regions should benefit from the slide in the lira.

But, says Atilla Yesilada, an expert at GlobalSource Partners, “this is not a concept that benefits every known region, including its family… Or its friends.”

The Turkish index fell 8.5 percent on Friday, prompting a temporary suspension of trade and other measures. Some businesses are making a profit because of falling prices. “Most of the companies listed in Borsa Istanbul are benefiting from the weakening lira,” said Selim Kunter, an economist at Ak Yatirim in Istanbul. He also mentioned publicly listed companies, security forces, automakers and pharmaceuticals such as companies that enjoy foreign exchange and operating in Turkey.

The success of these sessions has contributed to the rise in exports, encouraging economic growth which is expected to exceed 9 percent this year. But it is expected to come up with a 30 per cent rise in price in the coming months, injuring not only businesses that rely on energy and import equipment but also ordinary Turkish people who are struggling with the rising cost of living.

“Erdogan puts foreign investors ahead of families,” said Jason Tuvey of Capital Economics. “When you think about it, it doesn’t make sense at all.”

Many exporters have also criticized the volatile nature of the currency, which they say makes it difficult to buy and sell their products. Tusiad, a group representing large industrial companies that make up 85 percent of Turkey’s foreign trade, including energy, warned that the country’s trade needs are stable.

Musiad, a business group closely aligned with the ruling party, recently added his remarks to the criticism of the President’s approach.

“An entrepreneur needs to know how the money will be in two or three months and how much it will cost,” Mahmut Asmali, the group’s president, told a Turkish newspaper in Dunya last week. “The exchange rate chart should not look like a chart with a person with high blood pressure.”

Despite growing trade, the construction sector, which is closely linked to Erdogan and other ruling party officials, is also concerned. Industrial figures, which represent about 5 percent of Turkey’s economy, have warned that the sector is being hampered by rising commodity prices, which rose more than 90 percent a year in November.

Erdogan “has no game plan”, said Yesilada, meaning Turkish officials have spent billions of dollars. to protect the lira in recent weeks where at the same time I appreciate the benefits of low cost. We can talk for hours. Nothing makes sense, ”said Yesilada. “There is no logic at all.”

Yilmaz, a costume designer, said the home business that typically makes up half of its business was “dead”. He hopes foreign trade will address the losses.

But he predicted that half of his neighbors in Merter would leave within six months, evicted by a rent levied in dollars even though he banned the practice.

He said: “For now, I hope we can stop the storm. But I too may soon end.