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Seeds of crisis were sown way before meltdown began
24
Feb '09
According to a well-known industrialist from the textile and garment industry, the seeds of the current crisis affecting the textile industry in Turkey were sown, way before the sub-prime crisis unfolded in the US, leading to recessionary trends in most of the economies across the world.

Mr Tahir Gursoy, Chairman of Mithat Giyim, which exports clothing to the EU and US, and manufactures apparels for well known brands like Burberry, Banana Republic, GAP, Ralph Lauren and Lacoste, said, “the crisis has not barely touched Turkey, but shaken it”.

He said, “Some of the orders have already been cancelled and not just 2009, even 2010 will be a tough year. The government moved late in taking effective measures, and does not consider the perspective of the government to the economy healthy”.

He added by saying, the low foreign exchange rate coupled with high interest policies has pressurized the enterprises to no small extent and was among the main reasons for the sufferings in the export oriented textile and garment industry.

Due to the high interest regime, as much as 20 percent, he said, companies raised loans from abroad in the last few years at the then exchange rate of 1.20 lira to a dollar, but now the rate stands at Lira 1.60 to a dollar, leading to defaults in the textile industry.

Providing a word of advice he said, “In order to increase the pace of economic growth, we need to increase investment and consumption. The focus should be on production. Once people work and earn money will they start spending, leading to the revival of the economy”.

He categorically said, “Economic development has stalled and since the crisis is not expected to be over till 2010, we need to grow the economy by 5-7 percent and under the current circumstances, a tight monetary policy by the banks will only lead to deflation of the economy”.

The industrial output in December 2008, declined by 17.6 percent, the highest since records are being maintained ever since 1986.

Fibre2fashion News Desk - India

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