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Contraction deepens in construction

The Turkish Contractors Association emphasized that the contraction in the construction sector which was suppressed by increasing input costs deepened.

Contraction deepens in construction

The Turkish Contractors Association (TMB) stated that the contraction in the construction sector, which was suppressed by increasing input costs, deepened; He also stated that high indebtedness continues due to the delays in the progress payment payments of the contractors doing business with the public and the increasing tax burden.

TMB pointed out that for the rest of the year, the steps to combat inflation and the reflections of the Russia-Ukraine war will be decisive on the domestic and international projects of the sector.

In the Construction Industry July 2022 report published by the TMB, "In 2021, price increases of up to 150 percent were observed in input costs, and the rate of increase in the prices of major construction inputs exceeded 130 percent in the period of June 2021-April 2022. The basic input costs, which have increased considerably with the developments in the exchange rate, seem to have become extremely critical with the ongoing Russia-Ukraine war.

Pointing out that the current problem has also caused very high additional costs to the contractors who have been doing business with the public for a long time, the report said, "With the uncertainty in the financial conditions, the long-term delays in the progress payment payments and the increasing tax burden in the sector continue with high indebtedness."

There was a 7.2 percent contraction in the first quarter.

According to the data compiled from the BRSA in the report, while the total cash loans used in the construction sector were 340.5 billion TL in May 2021, this figure increased by 51 percent to 513.5 billion TL in the same month of 2022.

As of May 2022 the NPL ratio of the sector was approximately 6 percent with a loan amount of 30 billion TL. The construction sector contracted by 7.2 percent in the first quarter of this year.

In the report, which stated that the investments realized in the construction sector decreased by 9.8 percent in the first quarter of this year, it was stated that the activities in the sector came to a halt again due to the decrease in investments and the increasing input costs problem.

Only 4 new projects undertaken in 6 months in Russia

According to the report, the war between Russia and Ukraine created great uncertainties in Russia, Turkey's leading market for overseas contracting services; The regional loss in the annual foreign revenues of the sector now seems inevitable.

According to the report, Turkish contractors undertook a record $11 billion worth of new projects in Russia last year. In the first 6 months of this year, 4 new projects with a total value of 396 million dollars were undertaken in Russia.

Turkish contractors reached a new business volume of 4.6 billion dollars with a total of 132 projects in the first half of 2022.

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