War and the State of Our Industry…

Throughout the 103-year history of our Republic, our industrial sector has gained significant experience and weathered many storms. Therefore, each and every sector operating under the umbrella of industry in this country is of immense value to our nation and our future. Today, our industry, with its vast established capacity, serves as the driving force of our economy, contributes to development and provides jobs and livelihoods for millions of our people.

Despite its strong image as the cornerstone of social welfare and sustainable growth, our industry, whose every sector we must carefully protect, is unfortunately going through a tough period with a heavy price. Four years ago, I repeatedly emphasized that our industry was forced to bear a burden it did not deserve due to the problems created by economic policies - which I criticized and opposed at the time - that were, to put it succinctly, irrational. Today, however, our industry is effectively fighting for survival due to the new challenges arising from the war against Iran.

The greatest tragedy of the war that began between Iran, the U.S., and Israel is the destruction it has brought to civilians and civilian residential areas. For this reason, I hope that it will end as soon as possible and that peace and stability will be permanently established in our region. On the other hand, we are witnessing that this war is not merely a political and military conflict but has also turned into an economic war. Even if the war were to end shortly, the economic damage it has caused has already seriously impacted our lives. Therefore, it is clear that the developments unfolding will affect the Turkish economy, whether we like it or not.

Since 2023, Türkiye has transitioned to a rational policy framework in the economy; as a result, significant progress has been made toward reducing macroeconomic vulnerabilities and reestablishing financial stability. Due to this war, which erupted at a time when we needed time to achieve the macroeconomic targets set under the Mid-Term Program that has been in effect for three years, we are unfortunately faced with a completely different reality today. A significant division is observed in the global economy amid the most intense trade war of the past 60 years, and recent developments in the Middle East - after the war that has been raging just north of us for four years- have further exacerbated the situation.

Today, the world is experiencing an extraordinary and unprecedented period in many aspects. It is forcing countries to reassess their economic goals and policies. In this context, I believe we must reassess and strengthen the MTP and its targets, particularly regarding inflation, and adopt a more flexible approach to address these extraordinary global conditions.

We hope that the war will not last long and its damage will not be permanent. However, we must face certain realities. We believe that the necessary assessments must now be made to keep our industry and exports afloat; and that the economy management must demonstrate the results of the struggle we, as the industrial sector, have waged for years for the success of our economy.

In recent weeks, we have observed a degree of sensitivity in this direction, particularly through certain incentives announced for labor-intensive sectors. However, this is insufficient, and more comprehensive support is needed, for we are navigating a period where support and incentive mechanisms must be addressed more robustly to survive in the face of increasingly fierce global competition.

We discussed these critical issues and the current situation at the Joint Meeting of the Assembly and Professional Committees held last month under the agenda “The Pulse of the Real Sector: Sectoral Challenges and Strategic Solutions,” alongside our Minister of Treasury and Finance, Mr. Mehmet Şimşek. I would like to state that we held an extremely productive meeting - both in terms of the challenges and solution proposals shared by our industrialists speaking on behalf of the professional committees, and in terms of the Minister’s assessments - and we are confident that we will see the results of this in the coming period.

Last month, we also held another important consultation meeting with the Ministry of Trade. It was attended by our Deputy Ministers of Trade, Mr. Mustafa Tuzcu and Mr. Sezai Uçarmak, as well as the Ministry’s Department Directors and General Managers, and representatives of our Chamber’s Professional Committees had the opportunity to share their sectors’ current challenges and proposed solutions with Ministry officials and listen to evaluations and suggestions from our Deputy Ministers. You can read the details of this meeting in the following pages of our magazine.

We would like to once again thank our Minister, Mr. Mehmet Şimşek, who, despite his busy schedule, took the time to attend our meeting alongside his valued bureaucrats and, as always, listened to the voices of our industrialists, as well as our Deputy Ministers of Trade. I wish you all a healthy, peaceful, and prosperous month.

Erdal Bahçıvan
Istanbul Chamber of Industry
Chairman of the Board of Directors