49th SBF Meetings: Turkish Economy: Current Issues
The 49th of the traditional meetings organized by our faculty was held on 25.03.2021 through digital platforms with the title of "Turkish Economy: Current Issues".
Our program was organized by Ankara Yıldırım Beyazıt University Faculty of Political Sciences Head of Department of Economics. The meeting started with the opening speech of Prof. Dr. Erdal Tanas Karagöl. In his speech, Prof. Dr. Karagöl stated that there are many important topics to be discussed looking at the agenda of the Turkish economy. These are issue of Central Bank independence, a sudden change in central bank governor, interest-rate discussions, the volatility of exchange rate, capital inflow etc.
Prof. Dr. İbrahim Güran Yumuşak as the invited speaker of the meeting evaluated current problems of Turkish Economy. He drew attention Turkey's foreign policy preferences. In this context, foreign policy preferences and its direct impact on Turkish economy should not be ignored. Nowadays, most of Turkey’s economic problems are due to these preferences over regional issues and continuing threat of sanctions against Turkish Economy. He also mentioned about interest rate discussions. Although high interest rates are important in terms of attracting foreign investors, there are also risks it brings to the country's economy. At the same time, increased interest rate results in higher production costs and raising inflation. Rather than hot money, capital needs should be met through different channels. In Turkey, people often tend to keep their money, golds or their different currencies under the pillow due to for getting a feeling that the money is safe. It is necessary to earn the gold and currencies under the pillow to the economy with new investment instruments.
Assoc. Dr. Cemil ERARSLAN as the invited other speaker of the meeting evaluated current problems of Turkish Economy. He started his speech with the independence of the central bank, which has been discussed a lot in these days. When defining Central Banks’ independence, we talk about two different types of independence respectively economic and political independence. The Central Bank of the Republic of Turkey has gained these independences. When asked what policies will be implemented by the new central bank governor, he answered as follows: Şahap Kavcıoğlu will continue to use monetary policy tools effectively in line with the main goal of the central bank to achieve a permanent decrease in inflation. According to Assoc. Dr. Cemil Erarslan, without lowering inflation to single digits, it is not possible to lower the interest rate and achieve macroeconomic stability. So, Şahap Kavcıoğlu will go on keeping interest rates at high levels. He also mentioned the other current problem for Turkish economy which is called as dollarization. Although dollarization ratio started to decline gradually over the period aftermath of the 2001 economic crisis, it has been rapidly increasing from 30 percent to almost 65 percent in these days. For this reason, a tight monetary and fiscal policy should be implemented to reduce inflation and dollarization.
