Business Group Warns Turkey Risks Losing Industry
A leading pro-government business association in Turkey has warned that the country "risks losing industry" if high inflation and lending rates are not controlled. The group cited an increasing trend of manufacturers shifting production abroad due to the unsustainable cost of capital. This puts pressure on the government's monetary policy ahead of the central bank's next meeting.
- The business group that issued the warning, the Independent Industrialists and Businessmen's Association (MÜSİAD), is a major organization with thousands of members that has traditionally been supportive of the government's economic policies, making this public criticism particularly noteworthy. - Turkey's official annual inflation rate was 30.65% in January 2026, though independent economists from the Inflation Research Group (ENAG) estimate the figure to be closer to 53.4%. In response, the central bank has pursued aggressive interest rate hikes since mid-2023, though it made a small cut in its benchmark rate to 37% in January 2026. - The trend of manufacturers moving abroad is most evident in the textile industry, where rising labor and production costs have led over 200 Turkish companies to establish factories in Egypt. In a prominent example from September 2025, The North Face cut 80% of its orders from its long-standing Turkish supplier, shifting production to Vietnam and Bangladesh due to escalating costs. - MÜSİAD's chairman, Burhan Özdemir, stated that tight monetary policy alone is no longer sufficient to combat inflation, calling for structural reforms and better coordination between the ministries of Industry, Agriculture, Trade, and Finance. - Despite challenges in traditional manufacturing, the Turkish startup ecosystem has seen rapid growth, with its combined value growing ninefold between 20
