Turkey’s crisis-hit construction sector threatens big fallout
Once a driving force of economic growth, Turkey’s construction sector is among the first victims of the country’s economic turmoil, threatening a contagion effect on an array of other sectors.
Turkey’s construction sector, the backbone of Ankara’s growth policies for the past decade and half, stands out among the earliest victims of the country’s economic crisis, rapidly contracting and threatening to drag others down with it.
The sector, including realty, accounted for 15.7% of Turkey’s $851.5 billion in gross domestic product (GDP) last year, almost on par with the manufacturing sector, which accounted for 18.5% of GDP. After impressive expansion, sales are now shrinking rapidly for homes and offices, leaving builders with swelling stocks. Housing demand, in particular, has fallen sharply, hit by the slump of the Turkish lira and the ensuing increase in interest rates. Building companies are struggling to decrease stocks and repay bank loans. Despite government incentives, including tax cuts and cheaper loan campaigns, the sector remains in turmoil, and the circle appears to be tightening.
