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2.8​ ​BLOG: Turkey’s divergence from economic realities continues apace as state banks cut corporate rates right on cue
Turkish state-run banks on October 31 cut corporate loan rates by 200 bp to 11-13.5% after the central bank reduced its end-2019 inflation forecast to 12%.
Turkey’s official macro figures as well as market indicators are indeed distancing themselves from the realities on the ground at a quickening pace. What to make of the fourth inflation report for 2019 issued by the country’s central bank and Finance Minister Berat Albayrak on October 31? It is full of fresh good tidings—but held up against the actual state of the Turkish economy, it is surreal.
Albayrak, while addressing business people, announced the easing of corporate rates by public lenders. Very soon after, state trio Ziraat, Vakifbank and Halkbank, stated in a press release that they have launched a fresh lending campaign for “manufacturing industry”, “the services sector”, “ongoing housing projects” and “overseas contractors”, with the aim of boosting employment.
The three banks have been slashing interest rates to even below government bond rates. They have moved to boost lending since August, with a particular focus on Turkey’s construction industry—essentially bankrupted in many parts—and stimulating the collapsed domestic demand brought about by the summer 2018 currency crisis that triggered a recession.
15​ TURKEY Country Report​ November 2019 ​ ​www.intellinews.com