Turkey credit boom may be coming to an end - report
Turkey has seen a surge in lending in recent months, led by state-run banks, as the authorities sought to stimulate economic recovery, but the boom may be coming to an end, Dünya newspaper said.
Government-owned banks are now raising interest rates and are cutting loan maturities and waivers on debt repayments, Dünya said on Friday, without saying where it got the information.
The average annual interest rate on consumer loans increased to 12.77 percent in the week ending July 10 from 11.98 percent the previous week, the newspaper said, citing central bank data. Average rates on car loans have also risen for two-straight weeks, reaching 10.45 percent, it said.
As loan costs rise, growth in demand is slowing. Consumer loans expanded by a weekly 0.2 percent in the week to July 17 from 1.44 percent a week earlier and 2.2 percent a fortnight previously, Dünya said. A similar trend can be seen in car loans and mortgages, though growth rates remain comparatively higher, it said.
The slowdown comes as consumer confidence in the country falls and inflation accelerates.
Confidence among households dropped to 60.9 points in July from 62.6 in June, ending two-straight months of increases, the Turkish Statistical Institute said on Thursday. The index had stood at 72.7 in July last year. Any reading below 100 reflects pessimism.
Consumer price inflation accelerated to 12.6 percent in June from 11.4 percent in May. That prompted the central bank to keep its benchmark lending rate on hold at 8.25 percent in a decision on Thursday.
Turkish President Recep Tayyip Erdoğan said earlier this month that he expected strong economic growth in the second half of the year after the government eased measures taken to stem the spread of the COVID-19 virus. Markets for Turkish exports in Europe are also recovering, he said.