A contraction in Turkey’s construction sector has been triggered in the third quarter of 2015 amid political uncertainties, an economic slowdown, and rising security concerns, Construction Materials Industrialists Association (İMSAD) head Fethi Hinginar h
A contraction in Turkey’s construction sector has been triggered in the third quarter of 2015 amid political uncertainties, an economic slowdown, and rising security concerns, Construction Materials Industrialists Association (İMSAD) head Fethi Hinginar has said.
“The sector had already contracted under the election atmosphere in the first six months of the year. This trend has been accelerated in the third quarter amid rising political uncertainties and a slowdown in economic activity, as well as the escalation of security concerns. The slump in the third quarter may be around 2.5 percent. We plan to revise our yearend estimates down,” Hinginar told Reuters.
The construction sector constitutes around 5 percent of Turkey’s GDP and has been a motor of economic growth in recent years. The sector grew by 4.7 percent in the first six months of 2014 but it showed a slight slowdown in the same period of this year.
In June, İMSAD revised its growth forecast for both the construction sector and the construction materials sector to 2.5-3 percent, from 4.5 percent and 4.5-5 percent respectively.
The domestic construction materials market reached $52.1 billion in volume at the end of 2014, according to İMSAD data. The whole market volume was estimated at around $73.6 billion.
The indexes on activity, domestic sales, output and revenue in the construction materials sector all declined in İMSAD’s September survey. The expectation index for the next three months also regressed to two-year lows.
“There is a wait-and-see tendency in the sector. This has brought delays in payments across the market. An expected rise in debts may create a risk for the sector in the coming period,” said Hinginar.
He also noted that the sector’s exports declined by 18.6 percent in the first half of the year due to tension in Turkey’s neighboring countries and the ongoing slowdown in the eurozone.
The construction sector’s share in Turkey’s total exports is around 14 percent.