Page 22 - Turkey Outlook 2025

In 2024, the “normalisation” campaign lost steam. The central bank, meanwhile, keeps reiterating that it will keep applying its macroprudential set while keeping full control of the markets and banks.
Erdogan’s “businessmen” are, at the same time, still abusing the restructuring law that was introduced in 2018.
Since 2018, the regime has been applying “regulatory forbearance” measures to keep “zombie” companies, which actually bankrupted with the currency crisis, afloat.
With the latest tightening cycle launched in July 2023, the pressure is again mounting.
At end-2025, the forbearance measures will remain in effect.
No hyperinflationary accounting
In recent years Turkish banks have been pushing to apply hyperinflationary accounting rules, since they write down profits over inflation and pay high taxes.
If the domestic producer price index (PPI) is up more than 100% compared to its level three years ago and if it is up more than 10% during the last year, local corporates are obliged to apply hyperinflationary accounting rules in accordance with IAS 29 standards.
The banking watchdog BDDK has ruled again that the banks will not apply the rules in 2025.
No bigger banknotes
Turkish bankers have also been making loud calls for bigger banknotes.
As of November, 80.7% of the banknotes in circulation were 200-lira, the largest available banknote, due to the hyperinflation seen in Turkey across recent years. The figure stood at 80.4% in September.
Erdogan, seen as proud of a move he made in the early years of his two-decade rule to remove zeros from lira banknotes, will not consider requests for larger banknotes to address the hyperinflationary effects causing headaches. These headaches include overworked ATMs that break down.
5.3 Industry
The regime subsidises energy prices, the exchange rate and loan rates. As a result, economic activity simply produces a trade deficit.
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