Turkey has faced serious economic difficulties, which are manifested in mass bankruptcies of companies. According to Reuters, since the beginning of the year, the country recorded 28% more bankruptcies than in the same period of 2023. In total, from January to August 2024, about 15,000 companies went bankrupt.
The main reasons for this phenomenon are high inflation, which exceeded 75% at the beginning of the year, the overvalued Turkish lira, as well as the increase in electricity and gas prices. In particular, construction and textile companies file the largest number of applications for suspension of payments and bankruptcy procedures.
The high discount rate of the Central Bank of Turkey, which has risen to 50% in the last year, has made business loans very expensive. This became one of the causes of economic problems. In order to combat inflation, which fell to 52% in August, the Central Bank of Turkey raised the interest rate by 41.5%.
Businesses also face additional costs due to rising electricity and gas prices and higher minimum wages. In addition, Turkish companies have reduced export orders, especially in the textile sector, where competition with producers from Vietnam and Bangladesh has become too strong.
Turkey, which is one of the five largest global producers of clothing, is an important supplier for leading European brands. Mass bankruptcies lead to a chain reaction, slowing or stopping payments throughout the economy and increasing unemployment.
