Turkey has all kinds of resources and infrastructure to take part more strongly in new investment and production networks depending on the transformation in global value chains, its trade minister said Friday.
Speaking at a video conference of Restructuring of Global Supply Chain organized by the Turkish Industry and Business Association (TUSIAD), Ruhsar Pekcan said developments in information and communication technologies, lower transport costs and a decrease in tariff and non-tariff barriers to trade and investments lag behind the rapid rise in global value chains.
“Today, we face the possibility that this trend of the last 40 years will change or transform,” as triggered by the coronavirus pandemic which caused an unprecedented global economic shock and contraction, said Pekcan.
She noted the coronavirus driven contraction also weakened supply and demand while creating fluctuations in financial markets.
Citing the latest IMF reports, Pekcan said the global economy is expected to narrow 4.4% this year.
UN Trade and Development Agency (UNCTAD) forecasts a 30% – 40% decrease in global foreign direct investment, she said.
Noting that the COVID-19 crisis has activated deep fault lines in the functioning of global value chains, Pekcan said: “It has created breakages in the model of high interdependence between global companies and their suppliers located on different continents.”
Instability in production and logistics costs due to the coronavirus also forced companies to review plans and restructure themselves while slowing production, Pekcan said.
“The loyalty and dependency to China, which as the phrase goes has become the world’s main supplier, has been questioned.”
Pekcan underlined that producers in the US and the EU tend to bring suppliers to domestic or nearby regions and to increase localization.
Pointing to Turkey’s advantages in the transformation of global value chains, Pekcan said: “Many studies around the world show that our country has the potential to become one of the alternative supplier candidates in the new normal.
“Turkey, potentially, is one of the countries that can be shifted to a more advantageous position.”
President of TUSIAD Simone Kaslowski said world trade is expected to decline 9.2%, citing World Trade Organization data.
“Predictable regulation, trade and investment climate policy are indispensable to reduce the uncertainty of the conditions in which the global supply chain operates,” he said.
He highlighted that the private sector is faced with increases in demand for COVID-19 products and services and changes in demand patterns.
“The private sector is reassessing the need to strengthen the supply chain in terms of risk and efficiency.”
Noting that local and global initiatives are needed to restore trust, he said: “The success of these initiatives is to provide access to clear, early and reliable data on the pandemic.”
“This issue is primarily a human right and is also necessary for businesses to better manage their operations throughout the epidemic.”
Kaslowski also said Turkey must provide the necessary economic and structural fundamentals to become a center of attraction.
Recalling that economic stability comes first among these fundamentals, he said: “Uncertainties in the currency, interest and inflation cycle adversely affect economic stability and the real sector.
The best way to overcome these uncertainties is to have a clear monetary policy and correct communication of targets and tools.”
“The normalization process should be continued with clear policies,” he added.
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