Reverting to the default settings in the economy

We know from smartphones that they have various complex menus, and if we tinker with them excessively, we may end up damaging the system. In such cases, the only option left is to reset to the “factory settings,” which erases all the customized settings and allows for a fresh start.

The new leader of the economy, Mehmet Şimşek, has made a clear and bold statement: “Turkey has no option but to return to a rational foundation.” This statement reflects how much our “factory settings” have been disrupted. Indeed, the adoption of heterodox policies has caused such significant disruptions that a return to the starting point is necessary.


So far, so good, but there are two fundamental questions: 1) What are the factory settings? 2) Will the factory owner allow for a reset from heterodoxy? In fact, Şimşek himself defines the factory settings as follows: “The fundamental goal of our government is to increase societal welfare. Transparency, consistency, predictability, and compliance with international norms will be the basic principles to achieve this goal in the upcoming period.”

When it comes to resetting heterodoxy… Since we are talking about a shift towards rationality, all previous irrational practices will be reviewed and the damage they have caused will be addressed. In the process of transitioning to the new normal, bold decisions requiring political support will be taken to move away from a regulation-driven economy.


Are we returning to orthodoxy?

Actually, it won’t happen all at once. We will proceed slowly but urgently. First, the domestic and foreign markets will be convinced that we have moved away from heterodoxy. Then, decisions will be made to return to orthodox policies to establish credibility. Gradually, with controlled appreciation, the exchange rate of the Turkish lira will settle around the 24-25 TL range. It will be emphasized that interest rates can approach market values. Merkez Bankası (Central Bank), BDDK (Banking Regulation and Supervision Agency), TÜİK (Turkish Statistical Institute), and similar institutions will receive a merit-based boost. However, if these steps are realized, we can talk about an “L” turnaround.

And what about the fight against inflation?

You’re asking me from a place where I don’t work. There’s no such thing. Actually, it will be addressed after the local elections. During this process, the target of achieving single-digit inflation will be emphasized frequently. The most that will be done is inflation compensation, and the rhetoric of “we will not burden the public” will be reiterated.


Will money rain from the sky when Şimşek takes office? It could happen. After all, he has been promoted as having an “internationally reputable financial management.” Therefore, he should utilize this global credibility and bring foreign currency to our country. In my opinion, he can achieve that. Moreover, the positive outlook of foreigners towards the new cabinet will contribute to this.

However, the problem is that the market is still unable to overcome the “Naci Ağbal trauma.” From industrialists to financiers, traders, and producers, the question I frequently hear is, “Can Şimşek be removed from office overnight?” Resolving this trauma will be possible through Şimşek’s courageous, consistent, and decisive steps.

Yesterday, I mentioned what would happen in Şimşek’s first 100 days. My recommendation is for him to shape his team and then make a comprehensive public statement. Together with Cevdet Yılmaz, they should present their economic program and agenda for the first 100 days to the public. By doing so, they will further solidify the trust and confidence that has already been placed in them.

Şeref Oğuz Öneri-Yorum/Ekonomim

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