Turkish builders seek financing as confidence reaches pre-crisis levels

Turkish construction companies cited financing as a drag on growth as confidence in the industry reached levels unseen since a currency crisis in the summer of 2018.

Confidence among builders rose to 78.9 in January from 68.9 in December, according to a monthly survey published by the Turkish Statistical Institute on Monday. That was the highest level since March 2018.

Turkey’s construction industry has been among the worst affected after the currency crisis swept through the economy, causing a slump in consumer demand and hitting firms with foreign currency debts. The government has indicated that the central bank may encourage banks to target specific industries with lending this year, raising speculation that construction firms could benefit from additional stimulus.

Builders said financial constraints were a major factor limiting growth while insufficient demand became less of a drag, the survey showed. An index tracking order books increased to 64.6 from 48.6, while employment expectations rose to 93.3 from 89.2.

Turkish state-run banks have offered cheaper loans to people seeking to buy new homes in recent months. Mortgages now carry interest rates of as low as 0.79 percent per month, offering a lower annualised cost than inflation, which stood at 11.8 percent in December.

Confidence in the retail industry climbed to 105 in January from 102.6 the previous month, with expectations for sales and orders from suppliers increasing. Confidence in the services sector rose to 95.2 from 93.2 as employment expectations improved. Any reading below 100 indicates pessimism among firms.