Turkey in economic recovery after rate cuts – report

Turkey’s economy is in recovery mode after the central bank cut interest rates by a total of 750 basis points to 16.5 percent since July, Milliyet newspaper reported.

The rate reductions allowed state-run banks to slash interest rates on mortgages, personal loans and business credits, helping to revive demand. Non-government banks have followed suit.

“There is an increase in sales across the market,” said Cem Temel, a director at car firm Ford Otosan, according to the newspaper.

Bankers are saying that the central bank rate cuts haven’t boosted economic activity significantly, but a revival has nonetheless begun, Milliyet said.

Still, while demand for consumer loans and mortgages is increasing, there is no such strength in commercial lending, the bankers said.

“Demand for business loans is very low,” one banker said. “Because there is no production…In order for there to be demand for such loans money needs to come to Turkey from abroad. And there is no sign that people are cashing in their dollars.”

In the property market, sales of homes in Turkey climbed by 5 percent in August, indicating that the sector might be recovering from a severe downturn. More significant increases can be expected after the end of September, the bankers said, according to Milliyet.