Domestic demand remains a key driver of expansion, yet İstanbul Chamber of Commerce (İTO) President Şekib Avdagiç warned that escalating costs and cooling foreign demand could alter the composition of growth, pointing to the mounting global risk of "warflation."
Avdagiç highlighted the weakening correlation between inflation and the exchange rate, warning that this divergence could erode Türkiye’s competitiveness.
“In the first quarter of the year, cumulative inflation reached 10 percent, while the exchange rate rose only 3 percent. Over the past two years, average consumer and producer inflation stood at 70 percent, compared to a 42 percent increase in the exchange rate — leaving a 28-point gap,” the chamber head said.
He emphasized that maintaining a parallel trajectory between inflation and the exchange rate, or even favoring the exchange rate slightly, is essential for Türkiye’s competitiveness.
Avdagiç also underlined Türkiye’s strategic potential as Europe seeks to shift supply chains to closer and more reliable regions. With its customs union integration, advanced industrial infrastructure and supply advantages, Türkiye is positioned as a natural production hub and strategic partner for Europe, he said.
“We must take the necessary measures to shield the triangle of production, productivity and exports from the global warflation risk,” Avdagiç stated.
