Turkish regulators moved to rein in the country’s consumer borrowing, which nearly doubled in the last three years, with strict new limits on credit cards and consumer loans.
The new rules limit credit card installments for goods and services to 9 months, while banning installments entirely for telecommunications, jewelry, food and gasoline purchases. The rules, which come into effect Feb. 1 and were published today in the Official Gazette, are harsher than an earlier draft which was to cap installments to six months for electronic goods and to a year for home appliances.
“The new loan regulations are tighter than our expectations” Ozgur Altug, chief economist at BCG Partners in Istanbul, said by e-mail today. “Good for the current account deficit but bad for growth, especially in this environment.”
Turkey’s trade deficit, the largest component of the current-account balance, was $7.15 billion in November, according to the state statistics agency today. The current-account shortfall this year will probably widen to 7.2 percent of gross domestic product from 6.1 percent last year, according to the average estimate of 29 economists surveyed by Bloomberg. Growth will probably rise to 3.7 percent this year from 2.2 percent a year ago.
Outstanding consumer loans in Turkey rose to 246 billion liras ($116 billion) as of Dec. 20 from 129 billion liras in the same week of 2010, according to data on the banking regulator’s website. Total loans in the banking system rose to 1.04 trillion liras from 794 billion liras a year ago.
Turkey’s 16-member banking index has fallen 11 percent since a probe into official corruption led to the detention of people including the sons of cabinet ministers and the chief executive officer of state-run lender Turkiye Halk Bankasi AS (HALKB) on Dec. 17th. Charges in the probe include money laundering, bribery, gold smuggling and fixing of government tenders.
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