ISTANBUL, June 12 (Reuters) – Turkey’s high real rates contribute to the fight against inflation even as they harm economic growth, Omer Aras, executive at the business group TUSIAD which this year clashed with President Tayyip Erdogan, said on Thursday.
In February, Erdogan had a public feud with TUSIAD over remarks by Aras and the group’s President Orhan Turhan criticising a legal crackdown on the political opposition.
Authorities launched a probe into both executives and barred them from international travel. Erdogan said their comments about democracy and the erosion of trust over the crackdown undermined the government and amounted to meddling in politics.
Aras, also the chairman of QNB’s Turkish banking unit, told a TUSIAD event in Istanbul that interest rates will fall with the decline in inflation, adding that this could harm manufacturers if the process takes longer than needed.
He also said the modernisation of a customs union Turkey has in place with the European Union would strengthen its long-term economic reliability.
TUSIAD members account for 85% of Turkey’s foreign trade and contribute 80% of corporate tax revenue. It has solidly backed a high interest rate policy and belt-tightening to tackle rampant inflation, which has eased in recent months.
The probe into TUSIAD – long a symbol of Turkey’s wealthy business class whose influence has faded under Erdogan’s watch – prompted questions from foreign investors who have cheered a U-turn toward more orthodox policies since mid-2023.
TUSIAD Chairman Turhan, speaking at the same meeting, said that while gains being made through this monetary policy were important, they were insufficient, and structural reforms were also needed.
He added that growth figures of 2% from the first quarter of 2025 confirmed the slowdown in Turkey’s economy.
In comments that were softer in tone than previous speeches, Turhan said that turning social polarisation into social harmony would help establish a basis for the solution of issues in the economy.