Turkish companies are closing down en masse due to inflation and the fight against it
10 September 2024 15:57
A wave of business closures is spreading across Turkey amid an economic crisis caused by a tough inflation control policy. This was reported by "Komersant Ukrainian" reports with reference to Reuters.
Thus, over the past year, the Turkish government has been taking measures to curb years of high inflation, including raising the base interest rate to 50%. These steps, although aimed at stabilising the economy, pose serious challenges for businesses.
Thousands of Turkish companies, especially in the textile and export sectors, have found themselves in a difficult position. They are suffering from high inflation, which exceeded 75% at the beginning of the year, an overvalued lira, rising electricity and gas prices, and a decline in export orders. These factors significantly reduce the competitiveness of Turkish manufacturers on the international market.
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The situation is particularly acute in the textile industry. Turkey, which is one of the five largest clothing producers in the world, is facing serious competition from countries such as Vietnam and Bangladesh. Factory owners report a significant reduction in orders and the need to lay off workers to cut costs.
Statistics show the scale of the problem: almost 15,000 companies closed in the first seven months of the year, up 28% year-on-year. In addition, the number of companies seeking judicial protection against debts has increased, especially in the construction and textile sectors.
This situation has serious implications for the entire Turkish economy. Unemployment is rising, payments between companies are slowing down, which creates a risk of a chain reaction of bankruptcies. Economists warn that attempts to save one company could lead to problems for dozens of other creditor firms.
The Turkish government is facing a difficult dilemma: how to continue the fight against inflation without causing business collapse and mass unemployment. The situation remains tense, and many entrepreneurs are expressing pessimism about the immediate future of their companies.
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