Competitiveness and liquidity are the two key challenges for companies in times of hyper inflation in Turkey. This is what emerges from a report presented by the financial attaché of the Italian Consulate in Istanbul, Sergio Longoni, during a meeting with numerous representatives of some of the Italian companies working in Turkey, more than 1,400 in all.
The meeting was organised by Comites Istanbul, the Committee of Italians Abroad in the city on the Bosphorus, with the patronage of the Italian Embassy in Ankara and the Consulate General of Istanbul, in the presence of the entire Italian System, including Ice represented by Andrea Tacchini. The meeting was moderated by the Head of the Economic and Commercial Office of the Italian Embassy in Ankara, Francesco De Stefani.
Mr. Longoni analysed Turkey's economic path in recent years, characterised by high growth based on an expansive fiscal policy and a low cost of money that proved unsustainable in the long run. A pattern that has led to a persistently large current account deficit and one of the highest inflation rates in the world. In May it reached 75% year-on-year, which would be the peak, according to recent statements by the Central Bank, which has focused on monetary tightening, raising its key interest rate from 8.5% to 50% in just a few months.
The institution believes that from June inflation should start to fall, although the level at the end of the year would not fall below 38%. The costs of inflation, according to the report, create a distortion of economic choices, inequality effects, erosion of savings, and exchange rate instability, with the national currency constantly losing money: today 1 euro is worth about 35 lire, while a year ago it was worth 28. All these factors have an impact on Ankara's international competition as well as increasing production costs. The representatives of Italian companies shared the difficulties they face and the methods they use to deal with the challenges presented by the current situation, without, however, considering the possibility of leaving Turkey. On the other hand, the entrepreneurs present, who have been working with Ankara for more than 20 or 30 years, expressed optimism, pointing out that in the past they have seen much more serious crises in Turkey than the current one.
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