Turkey should move away from ‘gaining without earning,’ top industrialist says

Turkey should move away from ‘gaining without earning,’ top industrialist says

Turkey should move away from ‘gaining without earning,’ top industrialist says

İSO Chairman Bahçıvan says Turkey should move to a new growth model.

Turkey has gotten used to spending without producing over the last decade, but this old model is not beneficial for today’s economy, the head of Istanbul Chamber of Industry (ISO) has said.

“We are living an undeserved welfare that we didn’t deserve,” ISO Chairman Erdal Bahçıvan said in an exclusive interview with daily Hürriyet.

According to Bahçıvan, Turkey has recorded a success story with its prosperous growth of the past 10 years, but it needs to shift its focus on sustaining these impressive levels.

“Turkey witnessed a serious improvement between 2002 and 2012. The annual national income rose from $250 billion to $850 billion. There has been an excessive increase in welfare and a big self-confidence boom. But now we have reached a period where we need to discover a new chapter [in our economic story],” Bahçıvan added.

The chairman of the business organization that represents around 60 percent of Turkey’s industrialists said the growth of past 10 years has been grounded on financial stability.

“However the basis of this growth is composed of the service sector, public investments and constructions,” he said, adding that this has caused a remarkable stagnation since 2012 as the previous “model has expired.”

“The sudden rise in welfare caused us to become a society that moved away from producing by focusing on gains without actually earning… Our values have suffered from erosion. We have turned into a society that gains from consumption instead of production,” he added.

Regarding the repercussions of this situation on industrial development, Bahçıvan said “two strong opponents, the service and real estate sectors, have emerged as alternatives to industry.”

“Who would strive with production? The industrialist got confused with this process. Dealing with industry has become a fantasy,” he stressed, saying that this has triggered a generational clash between industrialists and the youth who do not want to deal with challenges of industry.

Bahçıvan, says that this model wasn’t wrong for that period of time as “people were eager to consume and this hunger must have been considered [by the government at the time],” however, this model is not relevant in today’s current economic climate.

When asked about the government’s stance on growth policies, he said “populist attraction of growth must have been effective for sure, but the reasons were right during the eight- to 10-year period because of high demand.”

Deputy Prime Minister Ali Babacan has also recently warned that luxury consumption and investment in luxury projects financed by foreign loans may cause further trouble down the road for Turkey.