2022 ECONOMIC ASSESSMENT and 2023 EXPECTATIONS
Expanded Presidents Meeting / 5 January 2023
Honourable Minister,
My esteemed Members of the Board of Directors, my Branch Presidents,
Esteemed Members of the Press,
Ladies and Gentlemen,
Our Economic Assessment Meeting, which we hold at the beginning of every year and which contains the inventory of the year left behind and the expectations of the newly beginning year, will, God willing, be instrumental in bringing about beneficial results.
I thank our Honourable Minister for his participation in our meeting, and at this first gathering of the new year I respectfully greet you all.
The year 2022 that we have left behind was the scene of extraordinary developments on a global scale and seriously disrupted the economies that were on a recovery trend after the Covid-19 pandemic.
In particular, the Russia-Ukraine War that broke out in February soon went beyond being a regional risk and turned into a major threat to the global economy. Although approximately 1 year has passed since the war began, uncertainties regarding global energy, global food and the global supply chain continue.
In 2022, when leading economies such as the United States and the Euro Area were compelled to face the highest inflation rates in their history, all countries struggled with significant difficulties in supporting households and producers against price increases.
Many countries that already had a high stock of public debt chose the path of further borrowing, expended intense effort to emerge from this crisis and took serious risks.
Honourable Minister,
Esteemed Guests,
While the global economy was living through one of the most difficult periods in its history in the shadow of the war, the Turkish economy too, of course, passed through an important year of testing.
The Turkish economy, which grew by %1.9 in 2020, the year the global economy was shaken by the Covid-19 shock and contracted by %3.0, and which took its place at the summit of the G20 with a growth performance of %11.4 in 2021, also sustained its strong growth trend in 2022 and has been the star of these highly difficult last 3 years.
After growing by %7.5 in the first quarter of the year, the Turkish economy increased its momentum in the second quarter and grew by %7.7 in that period, and despite the relative loss of momentum in the third quarter it achieved growth of %3.9.
Thus the Turkish economy, which achieved growth of %6.2 on an annual basis across the first three quarters of the year, will, once the final quarter data is announced, probably again take its place in the top 2 in the OECD and again in the top 3 in the G20 for 2022 as a whole.
The fact that the highest contribution to the said %6.2 growth came from domestic demand with 13.4 points indicates that the effort of the Central Bank of the Republic of Türkiye to keep economic activity alive through its monetary expansion policy has found a response in the markets.
In the first 9 months of the year the contribution of net foreign demand to growth was 2.0 points. Despite the stagnation and the contraction of demand observed in the EU countries, which constitute our largest export market, our export performance, breaking new records with each passing month, sustained its support for the increase in national income with a figure of USD 254.2 billion in 2022, an increase of % 12.9 compared with the previous year.
The contribution to growth of investments, which showed a relative stagnation in this period, was realized at the level of 0.6 points. Thus, in the January-September period of 2022, the Turkish economy recorded an all-round increase in GDP, receiving a positive contribution from domestic demand, net foreign demand and investments alike.
Honourable Minister,
Esteemed Guests,
As the poet Tevfik Fikret sought to express in the lines “He who does not rise falls: either terakkî (progress) or inhitât (decline)!”, the continuation of a strong growth performance is essential for the Turkish economy, which, through the moves it has made over the past 20 years, is continuing on its way with confident steps towards becoming both a global and a regional power.
In this context, the year 2023, the 100th anniversary of the proclamation of our Republic, is of considerable critical importance since it holds both many risks and many opportunities.
The rise in global producer and consumer prices, which climbed to the highest levels of the past 50 years under the pressure of energy and food prices, resulted in many countries shifting to a contractionary monetary policy. The interest rate hike decisions taken by leading economies such as the United States, the EU and the United Kingdom in order to rein in inflation have placed the risk of a global recession on our agenda as a strong possibility.
An economic contraction observed on a global scale will have many negative effects, above all the shrinking of foreign trade volumes and labour markets.
The suspension of recruitment processes by large firms such as Apple and Amazon, as well as the tendency of many firms towards mass layoffs, is interpreted as the first sign of a wave of global recession.
Although it has been relatively relaxed of late, the continuation of China's post-pandemic restriction policy also continues to disrupt supply processes and to affect adversely the international trade in many raw materials, intermediate goods and final products.
The turn towards protectionist policies by many countries wishing to benefit from global commodity prices that have reached exorbitant levels also confronts us as another element of risk.
All of these come to the fore as headings that will affect, directly or indirectly, the economic policies of our country as much as those of the whole world in 2023.
Honourable Minister,
Esteemed Guests,
Türkiye, however, thanks to its existing manufacturing potential, its flexible production capacity and its proximity to large markets, will achieve positive divergence in 2023 as well.
The price stability that will be established as inflation begins to fall in the coming months will support Türkiye in reaching its long-term economic targets. As you know, according to the most recently announced data, a decline of % 20 in inflation has been recorded as the first indicator in this direction.
Indeed, the fact that Turkish lira deposits have once again risen above foreign currency deposits shows that the fruits of the financial stability achieved through the liraization strategy have begun to be harvested.
The attainment of historic record levels in exports and employment, the positive course of the non-energy current account balance and the continuation without slowing of the increases in industrial production are each a proof of our country's strong macroeconomic infrastructure.
With the new minimum wage and the EYT regulation, which meet the expectations of both our employees and our employers, uncertainties concerning the labour markets have been reduced and thus the real sector has been enabled to see ahead more clearly.
The lowering of the policy rate to single digits, a historic step taken under the leadership of our President Mr. Recep Tayyip Erdoğan on the path of escaping the debt-interest-exchange rate vice, increases our belief that the production-, export- and employment-focused growth process will continue.
We believe that the Turkish economy will be one of the best-growing countries of 2023 as well, and that in the 100th year of our Republic it will achieve a growth performance above the world average.
On this occasion we, as MÜSİAD, wish to state once again that, as always, we are ready to shoulder our share of the burden so that the claim of the “Century of Türkiye” may make a beginning worthy of its name.
Honourable Minister,
Esteemed Guests,
With this I have completed our assessment concerning 2022 and our forecasts for 2023. Now, after receiving the assessments of our Minister of Treasury and Finance Mr. Nureddin Nebati, we shall bring to a close the first part of our meeting, which is open to the press.
As I hand over the floor to our Honourable Minister in order to receive his valuable views, I extend my gratitude to you all for your esteemed participation.