Dollar’s journey towards record highs has begun five years ago from now at a level of 1.78. As of this morning, it stands at around 4.05, which means a depreciation by 227%Let me tell you what this means:
If your income has not increased by the same rate over the last five years, if you still owe foreign currency debts, it means that you’re going through real difficulties. You don’t have to be a factory or business owner to experience such trouble. As everything, from private school tuitions to car prices, from sports equipment to construction materials, is indexed to foreign currency, everyone gets affected by this situation sooner or later. Not to mention, additional tariffs imposed on the abovementioned 227% figure to protect domestic firms against foreign competition.
Have you ever thought about this: “How come Turkey can achieve a growth by 7,4% and still survives?” There are multiple answers to this question.
- If it weren’t for the exports, stable foreign currency item would not exist. Exports were the one activity that saved Turkey especially when tourism revenues were in the sewer during Turkey-Russia tensions.
- Active portfolio capital inflow/outflow
- Extra momentum provided by the Credit Guarantee Fund
- Turkish people’s resilience
More reasons can be provided to justify what I mentioned above. The truth, however, is hidden above, somewhere between the lines. That is to say, Government was able to help the country survive by offering exports incentive, not protecting domestic companies by levying imports tariffs. We were saved by our strıng stance in foreign competition, rather than domestic competition regulations.
“It’s time to learn the truth…”
Some may argue, “Companies protected in domestic competition are active in foreign competition as well”. This means the Ministry of Economy should conduct a deep analysis in the issue and release the results of this analysis.” “It could have been worse. You should be thankful”, just won’t cut it.
If Turkey really needed trade protectionism, Credit Guarantee Fund and flexible approaches by financial sector, we need to know whether or not they were temporary, or whether they have been done as a “final favour” before deciding to make a radical change.
There’s one thing I know: We can’t survive with this economic model. We need to create new, powerful sectors in both domestic and foreign competition by lowering the productions costs. We need to provide added-value in branding, design, innovation, technology and R&D as well as in workforce. Such practices would help change the approach to the education too.
In brief, that’s what Turkey should do if it wants to make the biggest change in the history of Turkish Republic.