Page 88 - TURKRptDec19

The sector grew by 9% y/y in 2017 and contracted by 2% in 2018.
Turkish housing sales slipped 2.5% y/y in October to 142,810 houses​, the Turkish Statistical Institute (TUIK) said on November 18. The decline brought to an end a two-month trend of gains—and that was despite monetary easing of 1,000 bp in the benchmark rate delivered by the central bank since July.
Sales in October were also marginally lower than in September.
The data may lead to more anxieties among officials that many Turks are spurning the offer of cheap borrowing brought about by President Recep Tayyip Erdogan demanding cheaper loans for consumers from banks. Such a scenario would threaten plans for a big economic rebound pursued by the Turkish leader.
Erdogan wants Turkey’s economy, sent into recession earlier this year following the summer 2018 lira crisis, to recover with growth of 5% in 2020.
But many Turks, uncertain about the future, appear to be cutting back on investment and repaying debt instead of taking on new loans.
Turkey’s purchasing managers’ index, which measures manufacturing activity, fell back into negative territory in October as companies scaled back production due to a drop in demand at home and abroad.
Loans in Turkish lira, when adjusted for inflation, hardly grew in the three months to September compared with the previous quarter, when they contracted by 3.2%, Bloomberg noted in early November. Fixed capital investment has contracted for four-straight quarters. At the same time, corporates were reducing their stock of foreign loans and expanding their holdings of foreign exchange.
The Turkish central bank rewards banks that grow their loan books by between 10% and 20% annually. It penalises those who do not.
The pace of contraction in the Turkish construction industry eased in the third quarter but the latest data also shows that new business orders declined in the past couple of months​, the Construction Materials Producers’ Association (IMSAD) said in a report.
Problems in the industry, such as weak demand and the financial troubles with debt burdens and cashflow that construction companies face, might not have been felt as strongly as in previous quarters, but they still weighed heavily in the third quarter, the association warned.
IMSAD underlined that the strong recovery seen in homes sales in Turkey from July to October as a result of lower borrowing costs came to a halt in November.
The latest GDP data showed the construction industry contracted 7.8% on an annual basis in Q3, following the 9.2% and 12.4% declines in the sector’s output in the first and second quarters.
In July-September, the Turkish economy grew by 0.9% y/y. But the recovery in the economy and lower borrowing costs failed to provide strong momentum in the construction sector as new orders started to decline again, IMSAD said.
In line with the crisis in the housing sector, the Turkish construction materials production industry’s output declined more than 17% in the first nine months of the year, the association added.
88​ TURKEY Country Report​ December 2019 ​ ​www.intellinews.com