‘Capital seeks not only returns but also a predictable environment’

Organized since 2012 by Capital, Ekonomist and Start Up magazines, the International Economy Summit (UEZ 2026) is being held for the 15th time this year, hosting distinguished politicians, business leaders, and academics from Türkiye and around the world.

This year’s summit is held under the theme ‘The Great Transformation: A Compass for the Transition to a Resilient and Sustainable Global System’ with Tera Finance Group as the main sponsor.

The first panel of the summit focused on developments in the global economy. The session, moderated by Dr. Burcu Aydın, Director of TEPAV’s Center for Economic and Structural Policies, was sponsored by Garanti BBVA.

In her opening remarks, Dr. Aydın noted that Türkiye’s central bank has been in a monetary tightening cycle for the past three years. She emphasized that inflation, which exceeded 30% prior to the war, has become a decisive pressure factor for both households and the real sector in light of current targets.

Highlighting ongoing criticisms and the emergence of a new global shock, Aydın stated that the central bank has adopted a policy mix shaped by interest rate hikes and foreign reserve sales.

PROF. DR. AHMET KASIM HAN: REGIME CHANGE IS NEEDED IN THREE COUNTRIES SIMULTANEOUSLY

Prof. Dr. Ahmet Kasım Han of TED University stated that contrary to expectations in the 2000s and 2010s that global differences between countries would diminish, the world is now experiencing a clear divergence and transformation.

Commenting on the Iran conflict, Han said that a lasting peace appears unlikely:

“If you ask what would ensure lasting peace, I can tell you very clearly: regime change is required in three countries simultaneously-namely the United States, Israel, and Iran. Without changes in all three, establishing lasting peace in this region is highly unlikely.”

He stressed that rising geopolitical uncertainty and the risk of global conflict pose serious short-term risks, but in the long term, Turkish assets and the Turkish economy could generate significant opportunities and gains from this geopolitical fragmentation.

PROF. DR. ALİ HAKAN KARA: CENTRAL BANKS ALONE CANNOT SAVE THE WORLD

Prof. Dr. Ali Hakan Kara from Bilkent University evaluated central bank policies in the context of global crises and war.

He noted that central banks are no longer as rigid in their inflation targets as before, adding; “A central bank alone cannot save the world. Fiscal policy and other policy areas are just as decisive as monetary policy.”

Kara also stated that although Türkiye faces different shocks every March, it has demonstrated resilience:

“I am not very optimistic about inflation, but I am more positive regarding resilience and the capacity to absorb shocks. Fiscal policy is generally on track, though external shocks pose challenges. During the global financial crisis, Türkiye had a low credit rating, and we struggled to convince others of its resilience. However, the crisis later proved this resilience, leading to rating upgrades. A similar process could occur in the current war environment. As uncertainties decline, Türkiye may once again enter a phase of credit rating upgrades.”

‘IF UNCERTAINTY DECREASES, CAPITAL INFLOWS WILL INCREASE’

Seda Güler Mert emphasized that security concerns and geopolitical risks have become more prominent; “Globalization is not ending, but who you integrate with is becoming more important. The US-China rivalry, technological fragmentation, and trade wars are coming to the forefront. Countries are choosing their trade partners in alignment with their geopolitical partners.”

She added; “We are very close to an active conflict environment. War does not only affect risk premiums-it also disrupts logistics and raw material supply. Capital seeks the highest return, but also a predictable environment.”

Mert noted that Türkiye offers not only vulnerabilities but also advantages; “Industrial production capacity, a qualified workforce, a resilient private sector, strong service revenues, and relatively low public debt all present opportunities. However, when we ask why capital remains short-term and opportunistic, vulnerabilities such as high inflation come into play. We are facing both cost and confidence shocks. There are still questions about whether inflation will sustainably fall below 20%. While we have a solid foundation, we need to act more proactively. With climate change, food security must also be addressed. Türkiye will emerge stronger from this shock, but reducing uncertainty further will help increase capital inflows.”

‘A LONG-TERM CONTRACTION IN GLOBAL TRADE WOULD HARM EVERYONE’

Prof. Dr. Kamil Yılmaz from Koç University Department of Economics stated; “Over the past 60 years, global trade has steadily increased with globalization, but we are now witnessing rising problems and significant fractures. The world’s largest importer is imposing tariffs on the countries it imports from, while China, as a producer, is responding. We are witnessing a clash between two major powers. Third countries have acted more cautiously, trying to build bridges and explore whether a third path is possible.”

Yılmaz emphasized that a long-term contraction in global trade would be detrimental to all:

“The decoupling of the US and China reduces the global economy by around 4%. There is no need for excessive pessimism. Agreements between the EU and India, as well as among Pacific countries, are important developments. Rather than focusing solely on the Iran conflict, I look at the long term. Türkiye’s geographical location and its integration with Europe through the Customs Union are significant. We need to focus on how this emerging global order can benefit us and move us forward. We must continue taking steps regarding the Customs Union.”