Leading central banks, especially the U.S. Federal Reserve (Fed), emphasize that they are determined to monitor increases in both producer and consumer price indices for a while.
However, global markets and economic circles follow increases in the producer price index, an indicator of cost inflation, and the increase in producer inflation is present in a significant number of G-20 countries.
The “Vitamin D” cure, which stands for “Development,” should be prioritized in order to save the world economy from the effects of the COVID-19 pandemic and to help national economies recover from the destruction caused by the global pandemic.
On the one hand, while some Fed officials made statements such as "we must be on the lookout for inflation," the Fed's inflation forecasts were revised upward, and the global markets negatively priced the interest rate hike forecasts of some members for 2022 and 2023 at the last Fed meeting.
On the other hand, we should not ignore the assertion of Fed Chairperson Jerome Powell that they see the rise in inflation as temporary related to the “normalization” process following the pandemic and therefore will not rush into policy changes.
This is because all of the central banks of leading countries are aware of the need for growth and development right now, rather than prioritizing inflation.
For this reason, if any country prioritizes the rise in consumer inflation, considered to be temporary, and misses the upward adjustment in the interest rate hike, then the financing of production and exports will have been overpriced.
Instead, all the leading economies now seriously need to motivate and encourage production, investment and export.
The economic damage caused by the global pandemic has surpassed the level that can be covered by the resources of companies themselves, especially for small and medium-sized enterprises (SMEs), all around the world.
Therefore, thanks to both domestic trade and the foreign demand, i.e. imports, of countries that have been relatively less affected by the global pandemic, countries need to recover using their export volume. This is especially important for developing countries.
Important data in a newly published report of the World Bank points out that the share of developing countries in global exports increased from 16% to 30% between 1990 and 2017. Poverty in developing countries decreased from 36% to 9% in the same period.
For this reason, the fact that the G-7 countries and the economic power centers of the G-20 continue to grow their economies with supportive monetary and fiscal policies will help developing countries to develop and heal the wounds of the global pandemic with the exports they make to them.
Turkey, on the other hand, is undoubtedly moving to a new phase in terms of sustainability for its exports with green growth by carrying its export volume of goods, which is expected to reach $200 billion (TL 1.75 trillion) in 2021, to a new classification with clean production, clean energy and zero waste.
However, this time, the productivity approach also requires intense digitalization. With transformation based on sustainability, clean and renewable energy, zero carbon and zero waste principles and end-to-end digitalization, it will be important to rein in cost inflation by doubling raw material, labor and energy efficiency.
