Taha Akyol: Warning Signals Emerge from Turkey’s Industrial Sector
sanayi-eriyor
Warning signals are coming from Turkey’s industrial world. Don’t underestimate this — industrialization is the primary engine of modernization. In today’s world, becoming a developed and powerful nation depends first and foremost on having a robust industrial base.
Let’s take a look at some recent statements:
“We Fear Irreparable Damage,” Says ISO Head
Erdal Bahçıvan, President of the Istanbul Chamber of Industry (ISO), stated:
“We fear we’re heading toward a point where the damage to our industry may become irreparable, risking the loss of years of accumulated experience across every sector.”
Bahçıvan noted that inflationary policies have inflicted “serious economic damage.” While he supports Minister Mehmet Şimşek’s economic program, he expressed deep concern over “developments of the last 1.5 months.”
“2024 Is Already a Lost Year”
Ender Yorgancılar, Chairman of the Aegean Region Chamber of Industry, declared:
“2024 has already been a lost year. Sales from production have declined. If you look at the first-quarter results, you’ll see that 80% of the top 100 companies posted losses.”
To avoid making 2025 another lost year, Yorgancılar emphasized the need for a new, production-focused economic program based on shared wisdom.
A Longstanding Confidence Problem
The distress in industry isn’t new. The problems stretch back a decade, stemming from the government’s “interest is the cause” mantra, which fueled consumption and inflation through cheap credit.
Mehmet Şimşek was brought in with a limited mandate over monetary policy to steer the economy away from collapse. But political missteps are now eroding even the modest gains his orthodox policies achieved.
The “March 19 Incident” Shattered Trust
The already fragile confidence in the rule of law and the judiciary was severely shaken on March 19, when the arrest of Ekrem İmamoğlu and his associates was executed not as a routine legal process, but as a political operation — framed as “the big reveal” and a “shake-up.”
This lack of legal confidence led to an immediate exodus of foreign investors. According to Bloomberg (March 23), capital began fleeing the country.
To stabilize the lira — which had soared to nearly 40 to the dollar — the Central Bank burned through nearly $60 billion in reserves and hiked interest rates. The result: a steep drop in the stock market and a more challenging financing environment. The industrial sector is feeling the full weight of this fallout.
This, Bahçıvan warns, is precisely what has transpired in the past 1.5 months.
Now we’ve reached a point where political distrust is even undermining the previously declared market trust in Şimşek’s orthodox approach.
TÜSİAD’s Alarm — and the Retaliation
The Turkish Industry and Business Association (TÜSİAD) raised similar concerns. But the political backlash against TÜSİAD figures Ömer Aras and Orhan Turan further reinforced fears that the judiciary is being used not just for legal assurance, but also as a tool of intimidation.
As former Economy Minister Nihat Zeybekçi pointed out, this has harmed the economy.
Investment Isn’t Coming
When asked about investment at a panel in Doha, Minister Şimşek stated:
“We’re seeing improvements primarily in short-term capital inflows. But the picture for long-term investment isn’t yet clear.”
By carefully avoiding any discussion of Turkey’s legal troubles, Şimşek effectively revealed the core issue: foreign capital is entering to chase high interest returns — not to build long-term projects.
Why? Because investors remain uncertain about the long-term stability of politics and institutions.
That includes judicial independence, rule of law, the autonomy of the Central Bank and regulatory agencies, and the functional independence of the Turkish Statistical Institute (TÜİK).
These institutional shortcomings are the real reason long-term investment isn’t flowing into Turkey.
Ten Years of Missteps
March 19 caused a sharp rupture — but the economy was already standing on fragile foundations.
Earlier in March, economist Prof. Dr. Şenol Babuşcu warned:
“A misguided brake doesn’t slow the economy; it weakens it. If construction is growing while industry stagnates, we’re investing in today — not tomorrow.”
Similarly, Prof. Hakan Kara noted:
“The economy didn’t slow in the right place. We ended up burning muscle, not fat.”
In fact, the root of the problem goes back even further. Turkey’s 11th Development Plan — passed by this very government — admitted that since 2014, economic growth has relied too heavily on consumption, while investment and exports remained insufficient (Official Gazette, July 28, 2019, para. 131).
That’s how the past decade has unfolded. As Prof. Babuşcu put it, when governments invest in winning elections instead of securing the future, this is the result.
Had Turkey focused on agriculture, industry, and technology beginning in 2014, would we have fallen behind Bulgaria, Romania, and even Vietnam in tech exports?
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