Turkey Faces Surge in Business Closures

Turkey is experiencing a dramatic rise in business closures, with 15,000 companies shutting down in 2024, a 28% increase compared to the previous year, primarily affecting the garment and textile sectors. The economic strain is exemplified by Dogan Duman's garment factory, which has reduced its capacity by 60% after laying off a third of its workforce due to soaring operational costs and dwindling orders. Inflation, which peaked at over 75% earlier this year, has receded to 52% but continues to pressure businesses alongside significant hikes in electricity and gas prices. The overvalued Turkish lira has further diminished competitiveness against countries like Vietnam and Bangladesh. With interest rates having surged by 41.5 percentage points since June 2023, access to credit has become challenging, exacerbating financial difficulties for exporters. A recent steep increase in the minimum wage adds to the operational burden, raising concerns about future viability for many firms.