Turks’ soaring debts setting off alarm bells
Turks’ soaring debt levels are beginning to set off alarm bells, with the number of consumers having difficulty paying credit card debts jumping by more than 30 percent in June compared to the same month last year.
According to figures compiled by the Turkish Banks Association (TBB) Risk Center, nearly 186,000 Turks did not pay their loan or credit card debts to banks in June.
The most remarkable rise was in the number of people who failed to repay their credit card debts, with the figure rising to 116,093 from 88,885 last year, marking a 30.6 percent jump on an annual basis.
In the same month, the number of people who were unable to repay their individual loans surged by 21.7 percent, to 69,509.
The struggle to pay debts on time may be a reflection of the recent higher-than-expected rise in inflation and unemployment levels.
The upsurge in debts came despite new restrictions on installment payments and loans recently introduced by the country’s banking watchdog.
The Banking Regulation and Supervision Agency (BDDK) brought in new measures at the beginning of February to curb the use of credit cards to pay for goods in monthly installments, hoping this would restrict the country’s rising inflation and current account deficit.
However, with unemployment still failing to drop significantly and inflation levels remaining stubbornly high, consumers’ budgets are feeling the squeeze.
A considerable rise was also seen in the number of people who were unable to pay their debts across the first six months of the year as a whole.
While 660,962 people in Turkey failed to pay their credit card and loan debts to banks in the first half of last year, this figure rose by 22.7 percent to 811,283 in the same period of 2014.
Economist Mustafa Sönmez highlighted that there was a serious rise in unemployment numbers in May and predicted that the number could rise even further.
“It is predicted that the number of jobless has reached 3 million. This shows that there is an apparent decline in household income. There is a relation between unemployment and failure to pay individual and credit card debts,” Sönmez told Doğan News Agency. He added that excessive increases in the prices of basic goods, such as food, were hurting consumers, warning that signs suggest these pains will remain “unless the government intervenes with populist policies.”
Turks’ soaring debts setting off alarm bells - ECONOMICS
