Turkey Remains Net Debtor in Q1 2025 as Household Credit Surges

Turkey’s economy continued to post a net financial deficit in the first quarter of 2025, according to the Central Bank’s Financial Accounts Report. Total liabilities exceeded financial assets by over 10 trillion TL, while households added nearly 379 billion TL in debt, almost entirely from credit expansion.

Net Financial Position: TL 10.6 Trillion Deficit

According to the Central Bank of the Republic of Turkey (CBRT), the combined financial assets of domestic sectors stood at TL 136 trillion, while total liabilities reached TL 146 trillion, resulting in a net financial deficit of TL 10.6 trillion.

Net Borrowing Ratio Jumps to 5.82% of GDP

The ratio of Turkey’s net financial position to GDP declined to 22.8%, but the net borrowing rate jumped sharply from 3.29% in Q4 2024 to 5.82% in Q1 2025. This indicates an increased need for external or domestic financing across the economy.

Corporate and Government Sectors Drive Debt Growth

• Non-financial corporations held TL 55.8 trillion in financial assets but carried TL 72.9 trillion in liabilities, resulting in a net debt position of TL 17.1 trillion.

• The general government sector’s liabilities doubled its assets, climbing to TL 14.7 trillion.

In contrast, households remain Turkey’s strongest net creditor group, with TL 20.4 trillion in assets against TL 5.3 trillion in liabilities — a net position of TL 15.5 trillion. Deposits account for about 60% of household financial assets.

Financial Institutions Under Strain

The financial sector reported TL 52.2 trillion in assets and TL 53.5 trillion in liabilities, leading to a net deficit of TL 1.3 trillion. The imbalance highlights growing pressure within banks and non-bank financial institutions amid changing interest rates.

Foreign Investors Hold TL 13.5 Trillion in Net Claims

Non-residents held a net creditor position of TL 13.5 trillion against the Turkish economy, primarily through government-issued debt securities. This highlights Turkey’s continued reliance on foreign portfolio inflows for public financing.

Credit-Driven Household Debt Surge Raises Red Flags

Household liabilities increased by TL 379 billion in Q1 2025, with nearly all of the increase stemming from consumer credit. The report signals a growing risk to household financial resilience amid rising interest costs and inflation uncertainty.

Key household debt ratios:

• Debt-to-GDP: 9.7%

• Debt-to-financial assets: 22%

• Debt-to-disposable income: 21%

Turkey’s Debt Ratios Still Low by Global Standards

Turkey’s total debt-to-GDP ratio, as defined by financial accounts methodology, stood at 93%, well below levels seen in the Eurozone, France, and the United States. Household debt remains among the lowest globally, with a debt-to-GDP ratio of just 10%.

Valuation Effects Gaining Momentum

While transaction volume remained the main driver of asset and liability changes, the CBRT noted that valuation effects from currency and price movements became more pronounced in Q1 compared to the previous quarter.

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