Fighting Inflation in Turkey's Economy: The Need for Production and Structural Reform

Revision of Inflation Targets and Structural Issues The Central Bank’s decision to increase the inflation target by 5 percentage points is viewed as more than a technical revision; it is an indicator of structural congestion in the economy.
Raising the target is seen as an admission that expectations are not being managed, rather than a move to control price increases.
The fundamental reasons why inflation cannot be permanently lowered in Turkey include a lack of fiscal discipline, weak production capacity, and the selective application of free market rules.
Production and Cost-Oriented Approach The fight against inflation cannot be limited to interest rate policies alone.
In a structure where value-added industrial production does not increase, technology exports remain weak, and energy dependency continues, achieving price stability becomes difficult.
Turkey's primary problem is cost-push inflation based on energy imports and external dependency, rather than demand-pull inflation.
At this point, establishing trust is only possible through a production-oriented model.
Public Savings and Fiscal Policy A contradiction arises when fiscal policy remains loose while monetary policy is tightened.
In an environment where the state does not practice austerity, citizens' belt-tightening does not provide the necessary credibility in the fight against inflation.
In this context, reducing waste in public spending, implementing transparent budget discipline, and ending inefficient incentives are of critical importance.
Otherwise, the inconsistency between monetary and fiscal policies will continue to damage market confidence.
Foreign Trade and Sectoral Pressures Suppressed exchange rates in the face of high financing costs and rising domestic costs are causing exports to slow down and the current account deficit to increase.
Similarly, the tourism sector is struggling to reflect cost increases in its prices.
For a free market economy to function healthily, all parameters must follow their natural balance.
Strategic Solution Proposals Strategic steps for Turkey's economic recovery are grouped under the following headings: Providing strategic incentives for the production of intermediate goods.
Accelerating investments in energy independence.
Focusing on high value-added sectors such as defense, software, and biotechnology.
Implementing productivity reforms in agriculture.
In conclusion, unless there is a transition from a consumption-oriented model to a production-oriented economy, it appears difficult to achieve lasting success in the fight against inflation.