ANKARA: Turkish President Tayyip Erdogan is encouraging businesses to borrow and spend to power the economic growth that has underpinned his long rule. But after years of expanding credit, some Turks are wary.
Ankara hardware store owner Nurgul says she and her husband have never taken out a loan for their joint business and she is suspicious of banks. “I think they want more people in debt,” she said. “I’ve borrowed for my mortgage and that left me with an excessive amount of debt.”
The president, who has purged the civil service of suspected opponents since an attempted coup last year and is expected to run for reelection in 2019, shares her mistrust. He dubs interest rates “means of exploitation” and has declared himself their enemy.
Since winning a narrow victory in a referendum in April to create a powerful new executive presidency, he has had Turkey’s banks in his sights, calling on them to cut interest rates to contribute to the country’s growth.
“We will pressure the banks, especially state banks,” he said last week. “We will pave the way for investors to access credit easily.”
Government stimulus measures include expanding a credit guarantee fund, guaranteeing some of the loans banks write to smaller businesses. It has backed loans worth 210 billion lira (SR22.92 billion) so far.
Bank loans grew by 12 percent in the first seven months of this year, almost double the rate in same period last year, according to regulatory data, a trend some economists say is worrying.
Turkey has had one of the largest private credit expansions of any emerging market over the last decade, said William Jackson of Capital Economics in London.
“Typically when you get credit booms on that scale, they are followed by a rise in non-performing loans and strains in the banking sector,” he said. “It’s hard to say when those might emerge, but I think it’s clearly a big risk.”
Non-performing loans are at 3.1 percent after 3.2 percent last year. Cemil Ertem, chief economy adviser to the president, said he expected the ratio to fall to 2-2.5 percent in time, on the back of stiff selection criteria applied by the credit guarantee fund.
Since becoming prime minister nearly a decade and a half ago, Erdogan has built his reputation on years of stellar growth. His AK Party has embarked on massive infrastructure projects, building roads, hospitals, subways and high-speed rail, and lifting millions out of poverty.
In 2002, Turkey’s per capita GDP averaged $3,660, behind both Libya and Gabon, according to World Bank data. Last year, it was three times that at around $11,000.
Turkey now sits comfortably among the world top 20 economies and government ministers expect expansion of at least 5 percent this year, after a slowing to 3.2 percent last year.
“The economy is a priority after the referendum process,” said Hatice Karahan, an Erdogan adviser.
Turkey’s enemy of interest rates targets banks to boost growth
Turkey’s enemy of interest rates targets banks to boost growth
Kuwait airport targeted as Iran presses on with attacks on Gulf states
KUWAIT CITY/DUBAI: Gulf nations on Sunday reported new missile and drone attacks, while Iran vowed to press on with strikes against neighboring countries as the war entered its second week.
Kuwait’s defense forces were “responding to a wave of hostile drones” that penetrated the country’s airspace, accoring to the Defense Ministry.
“The fuel tanks of Kuwait International Airport were attacked by drones in a direct targeting of vital infrastructure,” the Kuwaiti News Agency (KUNA) reported, quoting a statement by the Public Authority for Civil Aviation.
Saudi Arabia's Ministry of Defense was also reporting a wave of drone attacks, saying 21 unmanned aerial vehicles were intercepted and destroyed in the last four hours.
Major General Turki Al-Maliki, spokesman for the Defense Ministry, said in separate posts on X that 13 drones were intercepted and destroyed east of the national capital, Riyadh city, while eight drones were shot down just after entering Saudi air space.
Qatar’s defense ministry said on Sunday that the country was targeted a day earlier by 10 ballistic missiles and two cruise missiles fired from Iran, but most of them were intercepted and caused no casualties.
Before midnight on Saturday, loud explosions were heard in Dubai, the Qatari capital Doha and Bahrain’s Manama, with attacks reported in the UAE, Saudi Arabia, Qatar and Kuwait, where the national oil company announced a “precautionary” cut to production.
The attacks came despite Iran’s president earlier apologizing to Gulf countries for earlier strikes. He had said they would no longer be targeted unless strikes were launched from their territory first.
Hours later, Iran said it would continue conducting strikes on sites in Gulf countries which were “at the disposal of the enemy.”
UAE President Mohammed bin Zayed Al Nahyan said in a rare televised address that the Emirates were in “a period of war” and “will emerge stronger” from it.
Dubai authorities said Saturday evening one person had been killed by debris from an “aerial interception,” adding they were a Pakistani national.
Dubai airport closed, reopens
Earlier in the day, Dubai closed its main airport — the world’s busiest for international traffic — after authorities said an unidentified object was intercepted nearby.
The government said there had been “a minor incident resulting from the fall of debris after an interception,” without directly mentioning the airport. It said there were no injuries.
The Flightradar24 tracking website earlier showed planes circling above the airport in an apparent holding pattern.
In a statement since deleted from X, Emirates, the largest airline in the Middle East, had announced it was suspending all flights to and from Dubai until further notice, but later said it had resumed operations.
The UAE, a US ally and home to American military installations, has been the most heavily targeted nation in the Gulf during the war.
Earlier in the day, the Ministry of Defense said that of the 16 ballistic missiles fired at the country on Saturday, all but one had been intercepted, with that missile falling into the sea.
Of the 121 drones detected, 119 were brought down, while two fell within Emirati territory.
The barrage brings the number of ballistic missiles detected by the UAE since the start of the war last Saturday to 221, the defense ministry said, with the number of drones surpassing 1,300.
Flights from Dubai’s main airport had partially resumed on Monday despite daily drone attacks targeting sites in the UAE.
Last Saturday, four employees were injured and an airport terminal damaged as the war broke out following US-Israeli strikes on Iran.
Iranian attacks have also hit Abu Dhabi airport, the upmarket Palm Jumeirah development and the Burj Al Arab luxury hotel over the past week, while drone debris caused a fire at the US consulate in Dubai on Tuesday.
Relentless air threats
Elsewhere in the Gulf on Saturday, Qatar’s defense ministry said its military had intercepted two missile attacks targeting the country.
Kuwait said Saturday night it had intercepted seven drones since dawn, with the attacks resulting “only in material damage from falling debris.”
And Bahrain said it has intercepted and 92 missiles and 151 drones since the start of the “brutal Iranian aggression.”
AFP journalists heard an explosion Saturday night in Manama, Bahrain’s capital, as authorities said one person was injured after rocket shrapnel fell in a public street.
In Saudi Arabia, the defense ministry said it had destroyed three ballistic missiles heading toward Prince Sultan Air Base, which hosts American troops, as well as 17 drones over the Shaybah oil field in the southeast.
Kuwait also reported intercepting a drone, while the country’s national oil company announced a “precautionary” cut to its production of crude due to Iranian attacks and threats to the Strait of Hormuz, a key transit point for Gulf hydrocarbons.
Further north, Jordan accused Iran of directly targeting sites in the kingdom, saying Tehran had fired 119 missiles and drones in the past week.
“These missiles and drones were targeting vital installations inside Jordan and were not passing through our territories,” said military spokesman Brig. Gen. Mustafa Hayari.
(With AFP)
