Turkish President Tayyip Erdogan is encouraging businesses to borrow and spend to power the economic growth that has underpinned his long rule.
But after years of expanding credit, some Turks are wary.
The Ankara hardware store owner Nurgul said she and her husband have never taken out a loan for their joint business and she is suspicious of banks. "I think they want more people in debt," she said. "I've borrowed for my mortgage and that left me with an excessive amount of debt."
The president, who has purged the civil service of suspected opponents since an attempted coup last year and is expected to run for re-election in 2019, shares her mistrust. He dubs interest rates "means of exploitation" and has declared himself their enemy.
Since winning a narrow victory in a referendum in April to create a powerful new executive presidency, he has had Turkey's banks in his sights, calling on them to cut interest rates to contribute to the country's growth.
"We will pressure the banks, especially state banks," he said last week. "We will pave the way for investors to access credit easily."
Government stimulus measures include expanding a credit guarantee fund, guaranteeing some of the loans banks write to smaller businesses. It has backed loans worth US$60 billion so far.
Bank loans grew by 12 per cent in the first seven months of this year, almost double the rate in same period last year, according to regulatory data, a trend some economists say is worrying.
Turkey has had one of the largest private credit expansions of any emerging market over the last decade, said William Jackson of Capital Economics in London.
"Typically when you get credit booms on that scale, they are followed by a rise in non-performing loans and strains in the banking sector," he said. "It's hard to say when those might emerge, but I think it's clearly a big risk."
Non-performing loans are at 3.1 per cent after 3.2 per cent last year. Cemil Ertem, chief economy adviser to the president, said he expected the ratio to fall to 2 to 2.5 per cent in time, on the back of stiff selection criteria applied by the credit guarantee fund.
Since becoming prime minister nearly a decade and a half ago, Mr Erdogan has built his reputation on years of stellar growth. His AK Party has embarked on huge infrastructure projects, building roads, hospitals, subways and high-speed rail, and lifting millions out of poverty.
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In 2002, Turkey's per capita GDP averaged $3,660, behind both Libya and Gabon, according to World Bank data. Last year, it was three times that at around $11,000.
Turkey now sits comfortably among the world top 20 economies and government ministers expect expansion of at least 5 per cent this year, after a slowing to 3.2 per cent last year.
"The economy is a priority after the referendum process," said Hatice Karahan, an Erdogan adviser.
Soner Cagaptay, a fellow at the Washington Institute think-tank and author of the The New Sultan: Erdogan and the Crisis of Modern Turkey, said sustaining prosperity was vital for the president's election prospects.
"Erdogan wins because he delivers economic growth. He has built a plurality - not yet a majority - that supports the AKP because he lifted so many people out of poverty," Mr Cagaptay said.
The AKP has a loyal support base of religious conservatives but needs economic growth to retain its wider appeal, analysts say. Hurt by a faltering economy, it took 41 per cent of the vote in June 2015 parliamentary elections, its worst showing since coming to power, although it regained ground in a second vote that year.
Mr Cagaptay estimates that about 10 per cent of the electorate, or about 20 per cent of AKP voters, are not die-hard Erdogan supporters. "It's that base that could easily abandon him should there be an economic collapse," he said.
While credit rating agency Fitch rates Turkey's debt as "junk" - citing the political risks that followed the failed coup attempt - it notes the economy is stronger than its peers.
The government recorded a 1 per cent budget deficit last year, one of the lowest in emerging markets, despite sheltering 3 million refugees from the war in neighbouring Syria. But that is now changing.
"Stimulus measures will weaken fiscal performance in 2017," Fitch said in July, referring to government forecasts of a deficit of 2 per cent of GDP this year.
That figure is still relatively strong and the government said last month Turkey would maintain fiscal discipline by reeling in spending.
Rather than borrowing, some economists say Turkey should focus on boosting its saving rate and foreign investment, something the government has pledged to do, along with an emphasis on structural reforms to spur growth.
Foreign investment stood at $12.3bn last year, down by more than $5bn from a year ago, amid concern over the rule of law. Some 150,000 people have been sacked or suspended from their jobs since the coup attempt and 50,000 people have been arrested.
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Match info
Karnataka Tuskers 110-3
J Charles 35, M Pretorius 1-19, Z Khan 0-16
Deccan Gladiators 111-5 in 8.3 overs
K Pollard 45*, S Zadran 2-18
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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FIRST TEST SCORES
England 458
South Africa 361 & 119 (36.4 overs)
England won by 211 runs and lead series 1-0
Player of the match: Moeen Ali (England)
Result
2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.
3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.
3.45pm: Handicap Dh115,000 1,950m; Winner: Conclusion, Antonio Fresu, Musabah Al Muhairi.
4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.
4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.
5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar
RESULTS
6.30pm UAE 1000 Guineas Trial Conditions (TB) US$100,000 (Dirt) 1,400m
Winner Final Song, Christophe Soumillon (jockey), Saeed bin Suroor (trainer).
7.05pm Handicap (TB) $135,000 (Turf) 1,000m
Winner Almanaara, Dane O’Neill, Doug Watson.
7.40pm Handicap (TB) $175,000 (D) 1,900m
Winner Grand Argentier, Brett Doyle, Doug Watson.
8.15pm Meydan Challenge Listed Handicap (TB) $175,000 (T) 1,400m
Winner Major Partnership, Patrick Cosgrave, Saeed bin Suroor.
8.50pm Dubai Stakes Group 3 (TB) $200,000 (D) 1,200m
Winner Gladiator King, Mickael Barzalona, Satish Seemar.
9.25pm Dubai Racing Club Classic Listed Handicap (TB) $175,000 (T) 2,410m
Winner Universal Order, Richard Mullen, David Simcock.
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 258hp from 5,000-6,500rpm
Torque: 400Nm from 1,550-4,000rpm
Transmission: Eight-speed auto
Fuel consumption: 6.1L/100km
Price: from Dh362,500
On sale: now
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
BIO
Favourite holiday destination: Turkey - because the government look after animals so well there.
Favourite film: I love scary movies. I have so many favourites but The Ring stands out.
Favourite book: The Lord of the Rings. I didn’t like the movies but I loved the books.
Favourite colour: Black.
Favourite music: Hard rock. I actually also perform as a rock DJ in Dubai.
Profile of Udrive
Date started: March 2016
Founder: Hasib Khan
Based: Dubai
Employees: 40
Amount raised (to date): $3.25m – $750,000 seed funding in 2017 and a Seed round of $2.5m last year. Raised $1.3m from Eureeca investors in January 2021 as part of a Series A round with a $5m target.
Stree
Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5
Closing the loophole on sugary drinks
As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.
The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.
Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed:
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Torbal Rayeh Wa Jayeh
Starring: Ali El Ghoureir, Khalil El Roumeithy, Mostafa Abo Seria
Stars: 3
