What will happen next?

The statements released during the weekend clearly shows that Turkey will have to paddle its own canoe for a little while more. Obviously, everyone is wondering what will happen next. So, I decided to make a quick analysis of the valuable data in order to make approximate predictions.

  • Banking and Finance: They seem to be standing strong for the moment. Surely, they would be even stronger if it weren’t for foreign currency loans provided to some sectors. It’s also good to hear that suspicions and concerns about the syndicated loans are slowly disappearing. Sooner or later, foreign investor will try to ensure their needs are met even though interest rates hit drastically high levels. Regulatory authorities must be careful when “regulating” as banking and finance are two crucial sectors to foreign investors. We are no longer allowed to use our rights to “Make balance sheets look prettier to the eye” or “Flex those risk parameters just a little bit”. Nevertheless, it looks like banking will pass the test under the current circumstances.
  • Real Sector: Real sector businesses do not hesitate to increase capacity to achieve the intended target especially now when the future looks pretty foggy. All manufacturing industry, including exporting sectors, is trying to keep their heads above water because of ever increasing production costs, not to mention industry groups having more debt stock than their revenues or going bankrupt. Exporting companies are managing to survive somehow but a number of other sectors are currently struggling with major problems. So, I give real sector a performance rating of 5 out of 10 only because of the past successes.

“Need to learn from our mistakes…”

  • Service Industry: Service industry is currently stuck between cost pressure and discount sale pressure. But it looks like the Food and Beverage sector is putting up a more resilient fight while struggling with exorbitant rents and employment costs. Offering a wide range of services from travel to e-trade, the service industry will soon get crushed under those loans provided at drastically high interest rates, and quite likely causing a great number of firms to perish in this big war of survival. With its current state, the service industry can easily get 5 out of 10 points nevertheless I must mention that its performance remains inconsistent.
  • Public Sector: The Public Sector is currently displaying a poor performance in terms of high quality human resources procurement, efficient use of monetary resources, and ability to make critical decisions, even though it always relies on the Government to have its back. It doesn’t provide confidence either as it is putting a lot of effort to convince the leaders that the economy is just fine while constantly making wrong moves to trigger rises in inflation, exchange and interest rates. The fact that the President has delivered harsh criticism over the weekend shows that he is not satisfied with the efforts to improve economy. As far as I understand from his comments, the public sector will probably fail, obliging them to take immediate preventive measures.

In the light of all the facts mentioned above, I think I would not be wrong in saying that a great deal of elements will get drowned in the waves too while we are trying to paddle our own canoe. It is obvious that many will lose their positions in the process of getting out from this bottleneck.
I just hope that all 4 sectors will learn from what is happening currently as much as they did from past mistakes to help Turkey see a better future.