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23. 12. 2015
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Panorama - Lower Lira and Higher Debt: A Bad Mix for Turkish Business

Panorama - Lower Lira and Higher Debt: A Bad Mix for Turkish Business

During 2015, Turkey’s economy faced several challenges

Turkey’s economy faced several challenges during 2015. The combination of greater political uncertainty, security issues and global economic worries caused a sharp depreciation in the lira, which hit its all-time weakest level against the dollar in September.

Turkish companies, dependent on capital inflows and input imports, have been negatively affected by the sharp fluctuations and strong depreciation of the lira. Compounding this, the euro’s weakness against the dollar narrowed the profit margins of companies with production costs denominated in USD and revenues in euros. The volume and value of bounced checks rose, indicating deterioration in company payment performance. Rising regional tensions also pulled down export volumes, restricting corporate revenues.

These developments negatively affected the outlook of sectors such as metals, construction and chemicals, especially during the first three quarters of the year.

With the significant easing of political tensions following the November 1 elections, the lira’s sell-off has diminished. In the coming months, more precise monetary policies from the US Federal Reserve could reduce the volatility of emerging currencies, including the lira. This development, coupled with higher consumer confidence, could improve the sectorial risks. However, regional security issues and the vulnerability of the country’s economic structure to external developments will continue to weigh on risk levels. This Panorama focuses on metals (excluding iron and steel) and the food and textiles sectors, which are the most affected by the lira’s depreciation. Additionally, recent geopolitical risks, including the tensions between Turkey and Russia and violence in Syria and Iraq, are also worsening payment performance in these sectors.


  • Deterioration in payment performance 
  • Sector outlook 
  • Conclusion
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