Turkish firms 'paying the bill' as political crisis roils economy

Turkish businesses across sectors were scrambling to reassess risk, with some already pausing planned investments and slashing budgets

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Turmoil unleashed by the arrest of Turkey’s leading opposition figure last week has sent shockwaves through the private sector, forcing companies to rethink strategy and dig in for a period of uncertainty and potential economic instability.

The detention of Istanbul Mayor Ekrem Imamoglu, who leads a long-serving President Tayyip Erdogan in some polls, has provoked the anti-government protests in a decade, leading to mass arrests and international condemnation.

The move also sent the lira currency to a record low, adding to a sell-off of Turkish assets that has destabilised company balance sheets and driven up already high borrowing costs.

Company officials told reuters that Turkish businesses across sectors were scrambling to reassess risk, with some already pausing planned investments and slashing budgets.

“The industrialists now have to pay the bill for a crisis they did not cause,” said Seref Fayat, chairman of Besler Group, which manufactures garments for leading Western brands and exports them to Europe and the United States.

Fayat, who also heads a garment industry lobby group, said his credit costs have spiked due to the market turmoil.

He had been drawing up budgets for a second-half expansion of his business in anticipation of an expected rebound in customer demand from Europe.