Turkish Industry's Comeback: Relief by 2026?

Turkish industrial giants, including Vestel, SASA, and Arcelik, are projecting a return to profitability by the close of 2026. This anticipated recovery is linked to the government's successful efforts to curb high inflation, which has burdened the sector since mid-2023. The stringent monetary policies, characterized by elevated interest rates and a strong lira, coupled with subdued domestic demand, have led to significant losses and diminished international competitiveness for many manufacturers.

While the first half of 2026 is expected to remain challenging, with inflation at 31% and interest rates at 38%, a gradual easing is anticipated. Executives and analysts foresee demand picking up as interest rates and the lira stabilize at lower levels. SASA, a major polyester producer, expects improved domestic sales in 2026 due to falling interest rates, although the impact of high financing costs was a primary reason for losses in 2025.

The economic difficulties have also impacted President Erdogan's standing, with manufacturing having shed approximately 600,000 jobs over three years. Despite optimistic government forecasts for inflation reduction, analysts suggest a slower path to recovery. Companies like Vestel and Arcelik, which reported substantial losses in the first nine months of 2025, faced additional pressures from weak European and Asian markets and increased labor costs in euro terms.