First criticism of Mehmet Şimşek's decisions from an AKP figure

Attending the February meeting of the Istanbul Chamber of Industry Assembly, AKP Deputy Chairman for Economic Affairs Nihat Zeybekci recalled the interest rate hikes and said, "It is not possible to lower inflation solely by reducing demand."

While Treasury and Finance Minister Mehmet Şimşek says they will limit domestic demand through interest rate hikes to reduce inflation and the current account deficit, a different voice has emerged from the AKP. 

"IT IS NOT POSSIBLE TO LOWER INFLATION"

Speaking at the Istanbul Chamber of Industry (İSO) February Assembly Meeting, AKP Deputy Chairman for Economic Affairs Nihat Zeybekci said, "It is not possible to lower inflation solely by reducing demand."

"We expect the money going toward demand due to interest rate hikes to return to money markets. But when you reduce demand, production also falls," said Zeybekci, adding, "A decline in production leads to a decrease in employment and a drop in purchasing power, and consequently to contraction. This is a result we, as Turkey, do not want." 

"Real struggle with inflation is only possible through production; it is possible to lower inflation by intensively planning and implementing production-focused support incentives, and along with this, by increasing labor force supports and providing support for energy costs in production fields," said Zeybekci, continuing as follows: 

"If we do these, we will be successful in the fight against inflation. Otherwise, it is not possible to lower inflation just by reducing demand."

"WE ARE AWARE OF THE DIFFICULTIES"

İSO President Erdal Bahçıvan also warned the government in his speech, saying, "If sacrifice is expected only from those representing the real economy, from us industrialists and exporters, this would both be unfair and cause much greater difficulties in production life." 

Bahçıvan stated, "While it is expected that the public sector should make sacrifices at least as much as other segments, I would especially like to express that the voices rising from the world of production should be listened to more."

Touching on the current exchange rate policy, he said, "We believe that while stability is being achieved in exchange rates, which are the primary source of the inflationary process we are experiencing, it should be on a reasonable path that considers external balances and competitiveness."

"Undoubtedly, creating appropriate financing conditions for the healthy functioning of production life is very important," said Bahçıvan, adding, "Even though our Central Bank has stopped interest rate hikes as of this month, we are aware that financing conditions will remain tight for a while longer during this transition process we are going through and the difficulties this will create for the real sector."

"On the other hand, the primary condition for achieving a healthy relief in financing conditions is the permanent achievement of disinflation and the elimination of the pressure on interest rates through this path," said Bahçıvan, adding, "This is our main expectation from our economic management during this transition process we are going through."

News Source: 12punto