Mutual Expectation for 2019: Peace, at least…

As the Fed wasn’t surprising for anyone, I’m moving on to more urgent matters. Expectations for 2019 were discussed in a round-table meeting held on Tuesday by one of the world’s most respected business magazines. And I happened to be among the 5 participants of the meeting.

A vice general director at a large bank, a CEO of a dominant supermarket chain, an internationally operating construction company, and a managing partner at a company offering consulting services for foreigners, we all have convened to brainstorm as the New Year approaches.

The owner of the construction company said, “We too became exporters now. We would have been collapsed by now if we couldn’t make business abroad.” Stating that the biggest problems in the construction industry today is that other sectors are trying to operate in construction too, causing extreme price competition, the owner also added that they can’t be provided with construction-related accurate or reliable statistics and data. As a matter of fact, this is a common problem of all sectors in Turkey. Reliable data doesn’t even exist in formal economy, let alone informal economy. Therefore, investments engaged based on second-hand information are sadly destined to collapse.

Representative for the retail industry said that they are not happy to see their own sector becomes both the reason and the remedy for the inflation. “We offer 10% instant discount to customers. But our suppliers do not offer the same discount to us”, emphasizing the problems in supply chain, he indicated that top executives in the sector overall have been quite stressed about the pay raises they will offer in January especially in a period where they obtain less and less profit. He also said that they’ve been witnessing lately that consumers buy less when prices go up.

“Low profit: not an investment attraction…”

Underlining the real reason why investors avoid investing in Turkey, the executive at the company providing funds to Turkey said, “Global investors have made mediocre profit in Turkey while they were making two or three times more money (in dollars) in EU member countries.” He also said that investors’ interest in Turkey has been diminishing since Gezi Park protests, however, Turkey is about to pass an important test about the IPOs, that’s why “confidence and structural reforms” are major issues that require urgent attention.

Bank representative, on the other hand, said almost 90% of banking transactions are carried out electronically via mobile phones; this rate could have easily hit 100% if Banking Regulation and Supervision Agency of Turkey (BDDK) did not stipulated that some specific transactions must be done in bank branches. Indicating that digitalization is a must capital markets value chain, he added that interest rates and exchange rates can be reduced to acceptable levels once Government establishes an environment that promotes confidence.

Here’s my brief summary of the meeting: 2019 will be a tough year that’s why Government should start implementing structural reforms especially now when Turkey is facing an economic slowdown. Maybe this way we can manage to turn economic slowdown into value. However, if we fail to grab this opportunity, this may even put the foreign currency earning activates at risk.

The meeting has ended with participants hoping that Turkey will not face election stress again for a very long time.

Professor Eğilmez and I, we are going to discuss all these issues in details on Wednesday, December 26th, 7.00pm, at AU’s Gayrettepe Campus. The event will be open to all participants. Arrive early and grab a seat!