ISO President Erdal Bahçıvan Sounds Alarm: “We’re Approaching a Tipping Point”

ISO :  Istanbul Chamber of Industry

The arrest of Istanbul Mayor and opposition presidential candidate Ekrem İmamoğlu on March 19 triggered major tremors across Turkey’s financial markets. Combined with the shockwaves from U.S. President Donald Trump’s recent policy decisions, the political turmoil forced the Central Bank of the Republic of Turkey (CBRT) to sell an estimated $45 billion from its reserves to stabilize the Turkish lira.

Emergency Measures and Sudden Interest Rate Hikes

In an unscheduled meeting on March 20, the CBRT responded by raising the overnight lending rate to 46%, while holding the policy rate steady at 42.5%. The overnight borrowing rate was left unchanged at 41%.

To calm equity markets, the Capital Markets Board (SPK) banned short-selling on Borsa Istanbul until April 25, 2025. It also eased restrictions on share buybacks by listed companies and took steps to support leveraged transactions. The SPK further lowered the order-to-trade ratio on the exchange to reduce volatility.

Despite these actions, market stress persisted. On April 17, the CBRT’s Monetary Policy Committee was compelled to raise the policy rate to 46%, ending a months-long easing cycle that had begun in late December 2024. The overnight lending rate was also raised to 49%.

“We Have Reached the Limit”

While households have long endured the pain of inflation, the recent developments have pushed Turkey’s industrial sector to the brink. In a column for Oksijen Weekly, Istanbul Chamber of Industry (İSO) President Erdal Bahçıvan voiced deep concern about the unsustainable strain placed on manufacturers.

ISO chairman Erdal Bahcivan

“As industrialists, we’ve consistently supported the fight against inflation. Our country has no luxury to retreat from this effort. But let it be clearly understood—industry, which is not the cause of this crisis, cannot be expected to endlessly bear the financial burden. We have reached the limits of our capacity, and this must be acknowledged by all stakeholders,” Bahçıvan warned.

Fragile Hopes Resting on the Medium-Term Program

Bahçıvan reiterated the industrial sector’s alignment with Turkey’s Medium-Term Program (OVP), calling it a key framework for ensuring financial stability.

“Despite its painful measures, the OVP had started to build a sense of confidence and stability in the economy. It was a difficult but meaningful path forward,” he said. “What we need is a committed rehabilitation phase that can restore Turkey’s credibility in global markets.”

According to Bahçıvan, industry had shown patience and discipline throughout this challenging transition. But recent events have cast doubt on whether that discipline is being matched by policymakers.

“Our Concerns Are Mounting”

Reflecting on the past six weeks, Bahçıvan expressed growing anxiety about the direction of economic policy:

“While we may not yet be back at square one, we fear we are drifting away from our original program goals. Measures taken to stabilize the exchange rate—though well-intentioned—are costing us hard-earned reserves. We are watching this with deep unease.”

He cautioned that recent interest rate hikes and liquidity tightening were placing a renewed burden on the industrial sector, which had already been weathering a storm for over a year.

“The combination of higher interest rates and tighter money supply has introduced a fresh wave of uncertainty. Financing costs are surging, and domestic demand is weakening. On top of that, growing trade tensions will likely exert downward pressure on exports,” Bahçıvan noted.

Conclusion: A Sector Under Stress

Bahçıvan’s message is clear: Turkey’s industrialists are not opposed to tough reforms—but they cannot absorb unlimited pressure. The dramatic rise in interest rates, coupled with dwindling foreign reserves and rising geopolitical risk, has reopened a chapter of volatility many had hoped was behind them.

As political uncertainty continues and economic policy veers off course, Turkey’s industrial leaders are now openly questioning how much longer they can sustain operations under such duress.

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