Mr Turan, President of TUSIAD (Turkish Industry and Business Association): "It’s time Türkiye had a heart-to-heart discussion"

03 Jan 2023
Mr Turan, President of TUSIAD (Turkish Industry and Business Association): "It’s time Türkiye had a heart-to-heart discussion"

Talking to Ekonomi newspaper, TUSIAD President Orhan Turan said, “We need to discuss how we can strengthen the republic and democracytogether. While economic problems deepen, we should not only discuss how to increase welfare, but also dwell on how it can be more equitably shared.

Orhan Turan, President of TUSIAD said it was time we discussed not only how to increase welfare and prosperity but also think about how welfare should be equitably distributed at a time when economic hardships are deepening. Underlining the fact that a 3 percent growth rate foreseen for 2023 would not be enough for Türkiye, Turan added that TUSIAD would launch a platform of discussion on different issues for the “centenary year” and that it was time Türkiye had a “heart-to-heart discussion”.

Speaking to Ekonomi newspaper, and responding to questions posed by Hakan Güldağ, Ekonomi newspaper Chairman of the Board, Mr Turan did a round-up of 2022 which is coming to an end and shared his expectations for 2023. Explaining that they will visit many cities in Türkiye and create an environment of debate and discussion with local partners, Turan said this would be “TUSIAD’s centenary project” adding, “We must discuss how we shall strengthen the republic and democracy together. While economic problems deepen, we should not only discuss how to increase welfare, but also dwell on how it can be more equitably shared. While we talk about growth and development, we should look for ways and means of how we will achieve it by protecting the environment. While global transformations are taking place at a dizzying pace, we need to determine how we will position our national strategy.” The following are the answers to our questions provided by Mr Orhan Turan, President of TUSIAD:

* Can you briefly give us a rundown of 2022? What are your expectations for the coming year?

2022 was shaped with the economic and geopolitical repercussions of Russia’s invasion of Ukraine. Higher inflation abroad prompted tighter monetary policy and higher interest rates, while growth rates declined. Whereas in Türkiye, exchange rate shocks, high inflation and a monetary policy focused on cutting interest rates left their mark on 2022. We started off 2022 with a highly volatile exchange rate and high inflation. We are ending the year with a slowdown in growth, reduced volatility in foreign exchange rates and an enduring high inflation. In parallel with the declining impact of monetary and fiscal policies that have been implemented, we have witnessed regulatory arrangements being utilised as a kind of economic policy instrument. In the coming year, implementation of policies that will aim to achieve stability in foreign exchange rates and prices and bring inflation down to single digits will be important. 2023 is an election year. As is the case in all election years, it is difficult to make predictions. The conditions of the Turkish economy, i.e., high inflation and volatility in exchange rates and frequent regulatory changes make it difficult to make a forecast for the coming year. Given that it is an election year, how to accelerate growth without causing macro imbalances is an important question. There is little wiggle room for economic policy for the coming year. The margins are tight and there is no room for error. Higher growth may upset the current account deficit, which may in turn, put pressure on the exchange rate and further increase inflation. We are therefore in a period when economic policies must be implemented with great care. Yet another parameter that may impact predictions for 2023 are the economic policies that will be implemented after the election. It is always difficult to make predictions about the Turkish economy, but I guess this year, it is even more so.


* The issue of the real economy’s access to financing is frequently on the agenda. What are your opinions on this?

Heavy regulatory arrangements make it more difficult for the financial sector to provide loans. Access to financial resources is vital for the sound growth of the economy. Many institutions including the OECD, IMF, S&P and Moody’s all predict a maximum growth rate of 3% for Türkiye in 2023. This is of course, quite a low rate both historically and also from a point of view of the welfare level we are aiming to reach. When you add to this, the rate of population increase there isn’t much room left for an increase in welfare. Historically a growth rate of 4-5% is normal for the Turkish economy. Any numbers below that level indicate a problem. Low growth hampers the ability to create employment. When adequate employment cannot be created and when inflation is high, economic conditions become difficult for fixed and low income people in particular. In order to maintain and enhance the level of welfare, Türkiye’s economy needs to grow by at least 5% annually.


* What should be done to fight inflation?

Inflation tops all economic problems. High inflation makes it difficult to meet all other economic targets including growth, job creation and achieving a fair distribution of income. In December last year and January of this year, monthly inflation was very high. When inflation turns out to be lower this December and in January of 2023, annual inflation will also fall. It is therefore possible for inflation to come down a little in 2023 from the level it has risen. What is important is what happens next. Because the slowdown in inflation, indicates drop in prices but a drop in the rate of increase of prices. That means pressure on the people’s purchasing power will continue. Therefore, the main priority of economic policy should be to bring back inflation to single digits.

We should do this by utilising all available instruments. The decision not to utilise monetary policy as a strong instrument makes it very difficult to fight inflation. Moreover, the fight against inflation cannot be achieved by monetary policy alone. We have been asserting this for a long time. Fiscal policy should be supporting monetary policy. Moreover, rigidities stemming from the production structure should be removed through structural reforms and the competitive structure of the markets should be enhanced. For the fight against inflation, it is vitally important that those in charge of the economy commit to reduce inflation very clearly and convey it to the public with the same clarity; and that decision makers in the economy should be convinced about their commitment.


* How can we overcome the obstacles in exports? How do you increase exports?

There are two main factors behind the decline in exports: The first is the slowing down in the global economy, and the slowdown Europe in particular. The tightening of monetary policy due to increasing inflation, slows down economic activity in the entire world. Declining demand in parallel with dwindling growth hurts Türkiye’s exports. The second factor is the increase in the cost of inputs, primarily that of energy. Competitiveness should rest on technology, value-added and innovation rather than on price parameters. That is because these are the main decisive factors in today’s world. In the 1970s and 80s, a model of industrialisation geared towards exports based on low exchange rates and low wages was implemented by East Asian nations in particular. But in the age of digitalisation, we cannot compete based on this model. Today’s economy is based on a quality work force that earns what its labour is worth and products with high value added, innovation and high technology. In other words, in order to enable our exports to be resilient to a declining demand in the world, we need to change the production structure and product range.

* The republic is getting ready to celebrate its 100th anniversary in 2023. What should Türkiye focus on during the the second century?

Development can only be possible through an understanding that aims to contribute to society’s welfare. We shared the main features of this new understanding with the public in our study entitled “Building the Future with a New Understanding” that we published last year. We should primarily focus on three elements; we briefly refer to these as “human resources, science, and institutions”. We need to develop the competences of our people. We need to take science and technology as a basis. We must put in place reliable and inclusive institutions and rules in all areas ranging from economy to law and democracy. We believe we can thus reach the goal of a developed, respectable, fair and environmentally friendly Türkiye.

* At the High Advisory Council meeting held in Ankara, you mentioned TUSIAD’s Centenary Project. What kind of project will this be?

We have gained a wealth of experience during the first one hundred years of our republic. As I emphasised during the High Advisory Council meeting we had in Ankara last week, there are important questions in front of us as we design our common future in the second one hundred years of our republic. We need to talk about how we can strengthen the republic and democracy together. As economic problems deepen, we need to discuss not only how to increase prosperity but also how welfare and prosperity can be equitably distributed. While we talk about growth and development, we should look for ways and means of how we will achieve it by protecting the environment. While global transformations are taking place at a dizzying pace, we need to determine how we will position our national strategy. In order to find answers to these questions that concern the entire society, we are launching a discussion platform which will continue throughout the year and where we will bring together stakeholders on a local level. “Now is the time to talk to each other, not tell each other.”. Let us come together around the ideal of the second century of our republic and regardless of our faith, ethnic identity, social class, gender and social group, let us all together start discussing a common future encompassing the hopes and dreams of each and every segment of society.


One of the largest obstacles facing our industry is the level of our domestic production of technology that meets international standards. Developing domestic technology will be a real contribution to Türkiye’s development story. We need to increase R&D based investments and human competences. We need to bring university-industry interaction to the highest level and strengthen the entrepreneurial environment. It is very important to enhance the capacity for technological advancement and innovation in order to reduce our reliance on imported inputs and investment goods. Small to Medium Sized Enterprises and start-ups producing technology will increase our competitiveness. Through the TUSIAD Industrial Digital Transformation Program we bring together companies looking for digital solutions and small to medium sized technology firms. The number of technology suppliers registered on the programme has exceeded 2000 while the number of digital solutions is over 500. We will continue helping the digitalisation of our industry through the TÜSİAD SD2 program. Moreover, within the framework of our “These Young People Have What it Takes” program that has completed its tenth year, we will support young entrepreneurs through three separate programs during the business idea, company formation and growth stages. I invite all young people to follow the our website and social media accounts.


The Carbon Border Adjustment Mechanism (CBAM) which will go into effect on 1 October 2023 is critically important as it will affect in the short term the aluminium, iron-steel and cement sectors in which Türkiye is an exporter. At this juncture, reducing carbon emissions in our industry and first and foremost in these sectors and value chains and realising the green transformation is of great importance. We see that awareness on this issue in the public and in the business world is quite high.

As TUSIAD, we are contributing and participating in initiatives taken in the public domain.

The details of implementing the Carbon Border Adjustment Mechanism (CBAM) will become clearer in the following stages. As the business world, we need to closely follow the secondary legislation about reporting and calculating in the next stage. It is quite important that an EU compliant emissions trading system (ETS) be put in place in our country so that the extra costs incurred by CBAM would remain in Türkiye and be used for environment and climate investments in the country.

Studies reveal that CBAM revenues being transferred to green transformation projects such as decarbonisation technologies will significantly reduce the negative impact of CBAM on the country’s economy. It is very important that the necessary finances are provided for companies to realise green transformation projects where digital technologies are used.


"Law and justice in particular have always been important agenda items in Türkiye. The issue of political bans which we have witnessed so many times in our political history and which have been proven to be wrong are unfortunately once again on the agenda. Banning politicians who have been duly elected by the people’s votes from undertaking their duties and from being elected to office due to their statements should have no place in a modern democratic society.”


I have stated that workers should not be allowed to be crushed under inflation. Wage increases were made in the private sector in the throughout the year. As you know, minimum wage is determined jointly within the framework of social dialogue by labour and employer confederations and the government. I hope the most sensible step will be taken. Meanwhile, unless the increase in inflation is prevented, it will not be possible to protect the purchasing power of workers. Fighting against inflation must be given the highest priority.


It is important that the issue of age requirement for people awaiting pensionable retirement (EYT) be solved. It was announced that the issue will soon be submitted to Parliament. We hope that the EYT initiatives which are being carried out in consultation with the stakeholders be resolved in a manner that will both protect the rights of employees and at the same time alleviate the difficulties that businesses might encounter.