Mountain of debt growing under the rug in Turkey
Turkey’s loan expansion has helped resuscitate the economy, but at the expense of an alarming surge in consumer and corporate debt.
The Turkish government’s monetary expansion policies, used as a quick fix to prevent major economic contractions, have resulted in an extraordinary consumer and corporate debt that poses further dilemmas for Ankara down the road.
Over the past year, the loan volume grew 40% as Ankara facilitated access to credit in a bid to contain the economic downturn caused by the coronavirus pandemic, which hit atop economic turmoil since 2018. The loan bonanza did stimulate the economy, but how lasting that impact will be remains open to question — not to mention its serious side effects that have already forced Ankara to change course.
