Market Research Report
Construction in Turkey - Key Trends and Opportunities to 2025 (Q1 2021)
|Published by||GlobalData||Product code||240899|
|Published||Content info||50 Pages
Delivery time: 1-2 business days
|Construction in Turkey - Key Trends and Opportunities to 2025 (Q1 2021)|
|Published: April 1, 2021||Content info: 50 Pages||
The Turkish construction industry was in a weakened state prior to the COVID-19-induced slowdown, having contracted sharply in 2019, owing to the steep depreciation in the lira and high interest rates, which pushed up construction costs and the cost of borrowing. As a result, the viability of projects was eroded, and firms had to bring projects to a halt. Over the next two years, more and more construction companies collapsed or sought bankruptcy protection. Following eight consecutive quarterly contractions, industry output increased, with value-add for Q3 2020 rising by 4.7% year on year (YoY). This turned out to be a false dawn, however, as the construction industry contracted by 12.5% YoY in Q4. Rising interest rates, coupled with the imposition of lockdown measures in response to the outbreak of COVID-19, contributed to the decline in Q4 2020. The key interest rate was increased to 17% in December 2020, which was up from 8.25% in May 2020. Dragged down by the steep decline in Q4, Turkey's construction industry contracted by 3.5% in real terms in 2020. The industry has also been affected by delays in project implementation and the reallocation of part of the government's budget toward its fight against the pandemic.
The industry is expected to recover and grow over the forecast period, however, driven by investment in renewable energy, education and transport infrastructure. The government plans to build 2,000km of high-speed rail lines from Kars in northeast Turkey to Edirne in the westernmost part of the country. This project is being partially financed by the Chinese Government. The Turkish Government aims to increase the share of renewable energy in electricity generation to 38.8% by 2023, compared to 32.5% in 2018. Spurred on by these investments, construction output is forecast by GlobalData to grow by 3.8% in 2021, and retain growth momentum over the forecast period, with average annual growth of 5.5% during 2022-2025. However, a downside for the industry is the prospect of a currency crisis following the sacking of the central bank governor, Naci Agbal, in March 2021. With Turkey's policy credibility likely to worsen in the coming months due to the expected cut in the key interest rate, the country is set to see major outflows of capital in the coming weeks and months. This is likely to spill over into the construction industry, with projects now set to become less profitable and financial conditions likely to tighten.
With an aim to support economic growth, on March 12, 2021 the government announced a new economic reform package, which includes plans to establish a stronger public finance structure to guard against risks. Furthermore, to reduce stock sensitivity to external shocks, the government plans to reduce the share of foreign exchange in the country's total debt stock market. The government also announced plans to cut corporate tax for low-income businesses in the country. Turkey also aims to build a digital tax office, which will operate round the clock to enable the public to carry out their transactions in the digital environment. Furthermore, the government is working on creating technological and legal infrastructure for digital currency.
This report provides detailed market analysis, information, and insights into the Turkish construction industry, including -
This report provides a comprehensive analysis of the construction industry in Turkey. It provides -