ITO President Avdagiç: ‘Exchange rate and inflation gap is over 40%’

Chairman of Istanbul Chamber of Commerce (ITO) Sekib Avdagic stated, ‘While the average of the price indexes of TUIK and ITO in the last year is 66%, the increase rate in the dollar-euro basket exchange rate is only 25.2%. The gap is over 40%. Every moment the gap between exchange rate and inflation remains open, it works against our exports and in favor of imports. The gap between exchange rate and inflation will eventually close.’ Avdagic made these remarks during the July council meeting of Istanbul Chamber of Commerce, where he evaluated the agenda of the business world. He emphasized the importance of not weakening the correlation between exchange rate and inflation to prevent negative impacts on the economy. Avdagic warned that if the gap between exchange rate and inflation remains open, it will lead to a permanent decrease in exports and a rapid increase in imports. He called for continuous attention from the economic management to maintain the balance.
Avdagic also mentioned that the normalization process in the Turkish economy is closely monitored by international investors, and significant foreign investment has been observed since June of last year. He anticipated a substantial inflow of foreign investment, especially in bonds, due to the noticeable slowdown in inflation. Avdagic cautioned that an inevitable influx of foreign funds could cause an excessive appreciation of the Turkish Lira, highlighting the need for a delicate balance in foreign exchange rates. He stressed the importance of a balanced approach in investment, incentives, interest rates, and foreign exchange policies.
Avdagic highlighted that inflation is a crucial issue closely monitored by everyone from low-income individuals to the business world. He pointed out that reaching below 50% in the annual Consumer Price Index (CPI) would be a significant turning point. Avdagic underlined the importance of maintaining strong commercial ties with neighboring countries to boost exports, mentioning that currently, Turkey’s total exports to neighboring countries are around 12-13%. He emphasized the necessity of further enhancing relationships with neighboring and regional countries to accelerate exports. Avdagic concluded by stating that good neighborly relations are essential for trade, and strengthening commercial ties can overcome any obstacles.