Construction Sector Contracts After 14 Quarters

While the Turkish economy continued to grow in the second quarter of 2026, the construction sector contracted by 1.9 percent following 14 consecutive quarters of growth. Türkiye Contractors Association (TMB) Chairman M. Erdal Eren stated that tight financing conditions, high borrowing costs, restrictions on public investment allocations, and cautious private sector investment have deepened the slowdown in the sector, and called for regulatory measures to address the issue.

The Turkish Statistical Institute's (TÜİK) growth data for the second quarter of 2026 revealed the loss of momentum in the construction sector. While the Turkish economy continued its growth, the construction sector, which had recorded uninterrupted growth for 14 quarters, contracted by 1.9 percent in the second quarter of the year.

Evaluating the growth data, Türkiye Contractors Association (TMB) Chairman M. Erdal Eren stated that they had previously drawn attention to the sector's slowing growth momentum, and said that current conditions had reversed the construction sector's growth performance.

Tight financing conditions are pressuring the sector
Noting that tight financing conditions, high borrowing costs, and cautious private sector investment were effective in the contraction of the construction sector, Eren stated that difficulties in accessing financing in particular had increased the pressure on the sector.

Eren included the following statements in his assessment:

"While the Turkish economy continued to grow according to Gross Domestic Product data for the second quarter of 2026, the picture has reversed for our sector. Our sector, which had grown uninterruptedly for 14 quarters, contracted by 1.9 percent in the second quarter of this year. We had previously drawn attention to the slowdown in our sector's growth momentum and voiced the problems awaiting solutions."

Emphasizing that, in addition to financing conditions, high borrowing costs and the cautious approach in private sector investments were decisive factors in the slowdown in the sector, Eren drew attention to the need to improve access-to-financing conditions for the sustainability of construction activities.

Contribution of earthquake-zone investments has decreased
Noting that reconstruction efforts in the earthquake zone and public-source infrastructure investments strongly supported the construction sector in 2023 and subsequent years, Eren said that this contribution had become relatively limited as of 2026.

Stating that this slowdown in public investments had proven insufficient to compensate for the loss of momentum in private sector-driven construction activities, Eren spoke as follows:

"In 2023 and the following years, reconstruction activities directed at the earthquake zone and public-source infrastructure investments strongly supported the sector; however, this contribution, which has become relatively more limited as of 2026, has proven insufficient to compensate for the slowdown in private sector-driven construction activities."

TMB calls for public investment and financing measures
Reminding that they had previously raised the issue of the pressure on the sector caused by restrictions on public investment allocations, difficulties in accessing financing, and high costs in the construction sector, Eren stated that resolving these problems was critical for the sector to re-enter a growth process.

Eren completed his assessment with the following words:

"We had frequently brought to the public's attention the pressures created by restrictions on public investment allocations, the difficulty of accessing financing, and high costs in the construction sector. The ongoing problems in these areas have led to our sector contracting after 14 quarters. Regulations to be made in these areas will enable our sector to return to positive growth and continue its contribution to the growth of the country's economy."