Turkey’s economy faced significant headwinds last year due to weakened demand, high interest rates, rising inflation and tighter government policies. Despite unstable market conditions in March, the country appears to be on the path to recovery, largely driven by private consumption.
On March 19, Istanbul Mayor Ekrem İmamoğlu was detained on corruption and terrorism-related charges. His arrest sparked anti-government protests and raised concerns about Turkey’s political and economic stability. The following day, the Central Bank of the Republic of Turkey (TCMB) sold off Turkish assets, mainly to foreign investors, bringing the credit default swap (CDS) premium to 296 basis points, up by 38 basis points, according to a FocusEconomics report. This resulted in a 10% depreciation of the lira and a 7% drop in the country’s stock market benchmark, the BIST 100 index.
Despite these challenges, Turkey’s gross domestic product (GDP) rose by 2% in the first quarter of 2025, according to the Turkish Statistical Institute (TUIK). Private consumption remains a key driver of growth, increasing 2% year-over-year and contributing 1.6% points to annual growth, Turkey’s İşbank reported.
In June, the Turkish annual consumer price inflation slowed to 35%, extending its fall from a peak of around 75% in May 2024, Reuters reported. “The central bank’s year-end inflation mid-point estimate currently stands at 24%, in a forecast range of 19% to 29%,” reads the Reuters article.
Turkey’s economy showed further signs of improvement in July after the central bank lowered its benchmark interest rate by 300 basis points to 43%.
Customers in Turkey averaged 19 days beyond terms in July, according to FCIB’s Credit and Collections Survey—a three-day increase from the October 2024 survey. Meanwhile, payment trends showed minimal change: 33% of respondents reported an increase in payment delays (down from 37%), while 67% reported no change (up from 63%). Previously, the most common cause for payment delays was customer payment policies (63%). In July, customer payment policy remained a major factor (50%), alongside cash flow issues and billing disputes (each at 50%).
To secure payment from Turkish customers, credit professionals reported using electric funds transfers (EFTs) and wire transfers. To reduce risk, many credit professionals are securing letters of credit (LCs). One respondent advised maintaining exposure within the approved credit limit. Another suggested checking regulations if drop shipping equipment.
