Debt Crisis Deepens in Türkiye: Construction Joins the List of Struggling Sectors

Türkiye’s construction industry has now joined the growing list of sectors overwhelmed by debt and insolvency, as persistent economic stress, soaring costs, and stagnating sales leave contractors unable to repay loans. According to the Risk Monitoring Center of the Banks Association of Türkiye, the number of businesses defaulting on bank loans rose 43.3% year-on-year in May, pushing the total number of defaulted borrowers past 4 million.

Construction Now Faces the Same Risks as Textile

Just as the textile sector grapples with widespread concordat filings and bankruptcies, the construction sector is showing similar warning signs. With unsold housing units and no new projects in the pipeline, many developers have landed on banks’ non-performing loan (NPL) lists.

The industry holds a massive ₺1.28 trillion in total credit debt, of which ₺62.67 billion has already moved into default status. This puts the sectoral NPL ratio at 4.9%, second only to the 4 million individual borrowers, whose combined NPL rate hovers around 5.2%.

Debt Becomes a Vicious Cycle: Warnings From Experts

Economists caution that the current crisis could mark just the beginning of a broader downturn. Due to a low exchange rate and high interest environment, Türkiye’s real sector is under severe pressure, and borrowers are increasingly unable to roll over their debts—even minimally.

“We’re seeing a spiral,” experts warn. “Over 4 million people are already in legal default, and many more are barely paying the minimum on their loans. If job losses rise, even minimum payments may stop.”

Given that construction and textile industries support a wide web of subcontractors and blue-collar workers, large-scale bankruptcies in these “locomotive sectors” could trigger a wave of unemployment and economic displacement.

Household Debt Tops ₺462 Billion, Defaults Soar

According to economist Prof. Dr. Şenol Babuşcu, who shared recent figures on social media:

• 517,000 people defaulted on personal loans, up 45.6% year-on-year

• 621,000 people defaulted on credit cards, up 44.9%

• Total individual borrowers under legal follow-up reached 4.06 million as of May 2025

Türkiye’s total loan stock has reached ₺19.04 trillion, while defaulted receivables have exceeded ₺462 billion. The personal loan default rate stands at 4.1%, while mortgage defaults remain the lowest at 0.4%, reflecting relatively better performance in housing finance.

Banks Selling Non-Performing Loans to Recovery Firms

Facing mounting defaults, banks are offloading non-performing loan portfolios to asset management companies. The latest example came from Garanti Bank, which sold two distressed loan portfolios totaling ₺1.02 billion (principal + interest) for just ₺205.13 million.

• Portfolio 1 sold to Sümer Varlık Yönetim A.Ş. for ₺103 million

• Portfolio 2 sold to Gelecek Varlık Yönetimi A.Ş. for ₺102.13 million

These portfolios include credit card debt, support loans, and check account balances—signaling widespread consumer debt stress.