Indebted Turkish consumers spur loan growth after costs slashed
Indebted Turkish consumers led an increase in demand for loans in the second half of last year as big cuts in interest rates failed to revive the market for corporate borrowing, Dünya newspaper reported.
So-called cash loans, which Turks typically use to finance day-to-day expenses and to buy small consumer and household goods, grew by more than 20 percent in July to December, outpacing a nominal 4.4 percent increase in business loans, Dünya said on Tuesday citing banking industry data. Overall consumer borrowing rose by 15.6 percent, it said.
The increase in cash loans was spurred by consumers restructuring their existing debts, rather than by spending on goods, the newspaper said citing the balance sheet data.
Turkey’s central bank cut its benchmark interest rate to 12 percent from 24 percent in a series of reductions from July. Monetary policymakers are backing government efforts to spur economic activity, which contracted following a currency crisis in August 2018.
Growth in business loans has failed to keep pace with annual inflation, which was 11.8 percent in December, the newspaper said.
Total loans in Turkey grew by a nominal 10.8 percent to 2.6 trillion liras ($436 billion) in the whole of last year, Dünya reported. Consumer loans expanded by 15 percent and business loans by 9.6 percent, it said.