Turkey's hobbled industrial giants eye relief in 2026 as inflation battle eases

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By Ceyda Caglayan Turkey's industrial powerhouses including Vestel, SASA and Arcelik, are poised to leave years of poor results and high costs behind by the end of 2026, as the painful taming of high inflation brings them and the broader economy some relief.The big makers of electronics, appliances and other goods have borne the brunt of the central bank's tight policies since mid-2023, and high interest rates, a strong lira currency and weak domestic demand have led to losses and hurt international competitiveness. More than half of the 238 companies in the Istanbul bourse's industrials index (.XUSIN) reported losses in the first nine months of last year, Reuters data shows. The manufacturing industry has shed some 600,000 jobs in three years, underlining the economic troubles that have hurt President Tayyip Erdogan's standing in opinion polls. With inflation at 31% and interest rates at 38% - and both declining only gradually - pain for industrial companies is set to continue in the first half of the year at least, according to executives and analysts. Some relief is seen towards the end of the year, as both rates and the lira are expected to settle lower. "We expect demand to increase in 2026 as interest rates fall, having a positive impact on our domestic sales," said Bulent Yilmazel, financial affairs and investor relations group manager at SASA BIST:SASA, among the largest global polyester producers. "High inflation and interest rates in Turkey led to a contraction in domestic demand, which was a major problem in 2025," Yilmazel told Reuters. SECTOR NEEDS RATE CUTS Beginning with the first of a series of lira crashes in 2018, big exporters benefited for a while from currency devaluation and relatively low borrowing costs under Erdogan's easy-money policies. But that changed in the last two years as interest rates were hiked as high as 50%, and as the central bank also largely stabilised the currency to contain import inflation. The bank is now cutting rates, which according to a Reuters poll are seen falling to 28% by year end - which would spell some cost relief for industrialists.Cemal Demirtas, head of research at Ata Invest, said rates need to fall below 30% for these companies to recover. "We expect to feel a little more relief starting in the second half of 2026," he said. After a meeting with Central Bank Governor Fatih Karahan last week, Tur...

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