A business group representing Turkey’s biggest companies said there would be serious financial consequences unless a solution was found for corporate debt.
“If the financing problems of the real sector aren’t solved, they will spread to the banking sector and finance industry; serious problems happen this way,” Tuncay Özilhan, president of the Turkish Industry and Business Association’s (TÜSİAD) High Advisory Council, said in a speech in Istanbul on Wednesday.
Turkish companies are finding it more expensive to repay debt, especially in foreign currencies, after the lira lost 28 percent of its value against the dollar last year and the economy tipped into a contraction. Consumers are becoming increasingly reluctant to spend after inflation surged to more than 20 percent and interest rates jumped.
The government has introduced a succession of measures to deal with Turkey’s economic difficulties, but structural problems cannot be resolved merely with short-term measures, Özilhan said.
Structural measures are needed to deal with industry’s problems, which have surfaced in loan restructuring and the spread of applications for protection from creditors to various sectors of the economy, Özilhan said. These problems threaten to get worse and keep reoccurring, he said.
Production and sales are falling, new jobs cannot be created, unemployment is increasing, and despite a partial improvement in the outlook, the causes of Turkey’s economic fragility persist, he said.
Özilhan said TÜSİAD also saw no willingness on the part of the government to deal with structural problems that have led to a steep increase in food prices, despite some measures that it has taken.
So long as production problems continue in agriculture, price trends would head upwards again, Özilhan said.
Source: Ahval News
