No progress in last six years keeps Turkey in middle-income trap, says TOBB boss

MANİSA

Union of Chambers and Commodity Exchanges of Turkey (TOBB) head Rifat Hisarcıklıoğlu. DHA Photo

Turkey has not seen economic progress over the last six years because it has not made any significant reforms, Union of Chambers and Commodity Exchanges of Turkey (TOBB) head Rifat Hisarcıklıoğlu has said.

“Because Turkish people have lost their common identity to live and move forward together, we are now all stuck in the middle-income trap,” Hisarcıklıoğlu said.

The TOBB head stated that “Turkey has made no progress for the last six years” and the country has “forgotten how to make reforms,” citing “too much conflict” as responsible for the country losing its ability to move forward together.

Turkey has increased its income per capita to $10,000 but has been unable to progress any further, Hisarcıklıoğlu said.

One of the government’s 2023 goals, to mark the 100th anniversary of the Turkish Republic, is to increase the country’s income per capita to $25,000.

“We need to grow faster to achieve this goal. Catching the same rapid growth trend we reached in 2009 is possible for Turkey by launching a new, ambitious industrialization process,” Hisarcıklıoğlu said.

Turkey’s economy has grown on average by 6 percent annually since 2010, but this has come at the expense of a persistently large external deficit, making the economy sensitive to changes in external financing conditions, the International Monetary Fund (IMF) warned in a written report on Nov. 21, adding that structural reforms are needed to address risks.

“Macroeconomic policies have been too accommodative, inflation is high and well above the authorities’ target, real policy interest rates remain negative and the exchange rate continues to be stronger than suggested by fundamentals. These imbalances are holding back growth potential and increasing risks.

They need to be addressed with carefully sequenced macroeconomic policies and structural reforms aimed at increasing aggregate savings, competitiveness and potential output,” stated the IMF report.