Construction buoys Turkish economy
Published on 07/11/2014
Turkey's construction sector is continuing to be one of the biggest stabilisers of the country's economy, with this trend set to be maintained in 2014 and beyond.
Since 2008, Turkey has defied the global economic downturn by averaging six per cent growth, and the construction sector has largely been to thank for this, expanding at 18.3 per cent and 11.5 per cent respectively in 2010 and 2011, and having a total compound annual growth rate of 12.6 per cent from 2009 to 2013.
Riding high
The construction sector is "riding high" according to the Istanbul Oxford Business Group, which notes that several major projects and an ongoing urban regeneration plan to demolish and rebuild one-third of the country's housing are having a significant impact.
According to a Market Research Report published last month, Turkey's construction growth is comfortably outpacing neighbours despite the global financial and eurozone crises, with analysts expecting continued growth into 2018 at the very least.
Furthermore, if the government stays in line with the Medium Term Economic Program unveiled by Deputy Prime Minister Ali Babacan in October, the construction sector will see some major project partnerships over the next five years.
Structured plan
In the short term, this will include three nuclear power plants, while longer-term plans include Turkey's third international airport.
In the second quarter of 2014, production and turnover in the sector slowed down marginally, but was still up 2.9 per cent compared with same quarter of the previous year, according to the Turkish Statistical Agency's calendar adjusted index.
One key benefactor has been Turkey's real estate sector, which currently accounts for a 19.5 per cent share of gross domestic product, and has directly impacted the Turkish economy as well as the construction sector.
Home sales underperformed slightly in the first seven months of the year compared to the same time in 2013, but Q3 signaled a strong rebound for the sector, with house sales increasing by 25 per cent and 13.2 per cent for August and September, compared to the same months in 2013.
Material effects
This approach is also having a positive effect on the building materials industry, with growth in cement, concrete and structural iron, though there is a need to ensure that costs do not escalate too greatly in these areas, to maximise progress,
Chairman of Arkon Construction, Gokhan Murat Kalsin, said that raw materials with high added value prices tend to be pricier in Turkey, and called for them to be brought under control.
He added: "Turkish contractors are quite famous in the world and they contribute significantly to the exports of Turkey; they create employment and they promote Turkey."
With government support, Mr Kalsun said the Turkish construction sector will continue to be "the locomotive sector" of the country both nationwide and internationally, and help to maintain economic stability moving forward.