Türkiye's industrial heavyweights are expected to emerge from years of weak results and high costs by the end of 2026, as progress in curbing inflation brings relief to companies and the wider economy.
Türkiye has pursued tight monetary and fiscal policies since mid-2023 in order to tame inflation. But high costs, a strong Turkish lira and cooled domestic demand have weighed on major manufacturers of electronics, appliances and other consumer goods.
With inflation at below 31% and interest rates at 38% – and both declining gradually – industrial companies are expected to see a relief toward the end of the year, as both borrowing costs and the lira are expected to settle lower, according to executives and analysts.
"We expect demand to increase in 2026 as interest rates fall, having a positive impact on our domestic sales," said Bülent Yılmazel, financial affairs and investor relations group manager at SASA, among the largest global polyester producers.
"High inflation and interest rates in Türkiye led to a contraction in domestic demand, which was a major problem in 2025," Yılmazel told Reuters.
Big exporters had benefited for a while from a depreciating lira and relatively low borrowing costs under easing 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 stabilized the currency to contain import inflation.
The bank is now cutting rates and is widely expected to continue doing so throughout 2026, which would eventually spell cost relief for industrialists.
Encouraged by the downward trend in inflation, the central bank shaved 950 basis points off its benchmark policy rate in 2025 to bring it down from 47.5%.
Cemal Demirtaş, 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 of the Republic of Türkiye (CBRT) Governor Fatih Karahan last week, Türkiye Exporters Assembly (TIM) said the bank was poised to support the sector more, including possibly with incentives for converting foreign exchange earnings.
Among the hardest hit industrials are Vestel Elektronik, the consumer electronics company, and Arçelik, the home appliance maker and top player in Europe with its Beko brand.
In the first nine months of last year, Vestel topped the list of all loss-making Istanbul-listed industrials with a TL 18.3 billion ($430 million) loss, followed by SASA's nearly TL 10-billion loss and Arçelik's TL 6.4-billion loss.
In their latest results assessments, all three companies cited weak demand in Europe and Asia as another major challenge. Vestel said the lira's real appreciation "led to higher labor costs in euro terms, weighing on profitability" in the first three quarters of 2025, while Arçelik cited pricing pressures.
Yılmazel of SASA said it was not easy coping with the high financing expenses, which he called the main reason for last year's loss. This year, he said SASA will likely refinance a large portion of loans to take advantage of falling rates.
"As the interest rates keep falling, recovery will be felt more. The second half of the year looks set to be much better than the first half," Yılmazel said.
Inflation eased steadily over the last year and ended 2025 at 30.89% annually, the lowest rate since November 2021. That compared to 44.4% posted a year earlier.
The government projects inflation to dip as far as 16% by the end of this year, within a 13%-19% range, and falling to 9% in 2027. The central bank forecasts inflation between 13%-19%.
"With inflation falling moderately, interest rates declining at a steady pace and with predictability increasing, a recovery for industrials will be more apparent in the second half of the year," Imer Özer, general manager of a chemical products manufacturer at Kocaeli, Koruma Temizlik, said.
