I met with the flour industrialists on Tuesday to discuss how they will be able to maintain their businesses after the 28 May elections, as the wheat prices are constantly fluctuating and the share of agriculture in GDP has been decreasing since the 1960s.
Nobody believes that we can get anywhere with the current economic model. However, no one has any idea how to persuade the government to replace it with a new and more effective one. I, for instance, came up with the idea of “reviving the economic and social council”. Agreeing with my suggestions, other participants said that it must be done as soon as TOBB (the Union of Chambers and Commodity Exchanges of Turkey) elections are over”.
Business people are particularly worried about the fact that there currently are two different US Dollar/TRY exchange rates in the country, one offered by banks and the other by currency exchange offices. This situation has caused a currency dispute between suppliers and manufacturers, leading to a further deterioration both in pricing behaviour and the ability to forecast. Everyone hopes that this duality will disappear on 29 May.
The failure to gradually transition to the free market economy will result in major problems, and if the government is re-elected, it may decide to keep the current model try to implement it in different ways. Therefore, the industry and the business representatives in Turkey should better hurry up to convince the government to re-embrace the free market before it’s too late”.
Just as I thought, the Central Bank made the safe and practical decision of keeping interest rates intact, avoiding putting the elections at risk as rates around the world continue to rise.
Knowing that this safe approach will not be enough for the markets, the CBRT did the appropriate thing and avoided issuing an upsetting press release about the economic model to be implemented after 29 May.