Economy
Participation finance share in Türkiye rises to around 9%: CBRT chief
Participation finance in Türkiye has grown steadily over the past decade, with its share of total financial assets standing at nearly 9% today, the Turkish central bank chief said on Friday.
That is up from a 4.5% share in the early 2010s, Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan told the 3rd Global Islamic Economy Summit.
Often known as interest-free or Shariah-compliant finance, the sector has expanded in a “stable and consistent” manner rather than through rapid growth spurts, Karahan said.
He highlighted that Islamic finance provides an alternative funding channel, particularly for small and medium-sized enterprises (SMEs) that may struggle to access conventional credit.
“Many SMEs that cannot obtain loans through traditional banking tools are able to continue their operations through participation finance instruments,” he said, adding that this contributes to broader financial inclusion and the efficient use of idle savings.
Karahan suggested that participation banks have demonstrated stronger loan growth compared to conventional banks, contributing to their rising market share.
He also noted that the CBRT has been developing liquidity management tools compatible with participation finance principles, alongside macroprudential policies tailored to the sector’s structure.
“The calibration process has been ongoing for two years,” Karahan said, adding that some CBRT credit facilities for exporters and long-term investment financing have been restructured so they can also be accessed by participation finance institutions, helping increase their market presence.
The Turkish central bank is set to convene for a key policy meeting this week, another one since the start of the U.S.-Israeli war with Iran, which has sharply lifted global oil prices, prompting a more cautious stance by the economic actors worldwide.
The Central Bank of the Republic of Türkiye (CBRT) will, June 11, decide whether to keep interest rates unchanged at the current level of 37% or instead potentially opt for a hike as recent data indicated a mild uptick in annual inflation in May, despite the monthly reading coming in less than the prior month.
In May, consumer prices increased 1.71% monthly and 32.61% annually, official data showed on Friday. That compared to 4.18% monthly and 32.37% annually registered in April.
The data shared by the Turkish Statistical Institute (TurkStat) revealed that although education and housing remained among the leading drivers that contributed to the annual surge in the index, transportation and food and non-alcoholic beverages also posted increases above the median.
The central bank raised its year-end interm inflation target to 24% from 16% last month, forecasting that the short-term inflationary effects of the Iran war would remain “pronounced,” as the war-related surge in energy prices has impacted countries that rely on energy imports.
“Although geopolitical risks and volatility in energy prices continue to exert pressure on the inflation outlook, we have limited these effects with the steps we have taken,” Treasury and Finance Minister Mehmet Şimşek said in a post on X, commenting on the May data.
Prior to the outbreak of the Iran war, Ankara had managed to lower inflation to the level of around 30s compared to above 80% in late 2022.
Earlier this week, Şimşek pledged that commitment to disinflation remains “firm.”
However, amid the Iran-war related pressures, which have weighed on prices in different regions, including Europe, analysts are debating whether central banks would turn to rate hikes to contain the fallout.
This week will also mark the meeting of the European Central Bank (ECB), where the bank is expected to be the first one among major global banks to raise rates amid the war. Polls point to a definite hike by a quarter percentage point, to 2.25%, as inflation in the eurozone accelerated over the past two months.
For Türkiye, economists currently expect the bank to keep rates unchanged at 37%, although a hike is not excluded.
A recent survey by financial services provider Matriks, suggested that the CBRT is most likely to keep rates on hold. Of 33 economists who provided forecasts for the June Monetary Policy Committee (MPC) meeting, 27 predicted that the weekly repo rate would remain unchanged.
Six economists, however, predicted that the policy rate could be increased by 300 basis points to 40%.
Last month, amid the latest political developments in the country, U.S. banking giant JP Morgan also said it expected the policy rate to be hiked to 40%.
Dutch banking giant ING, in a report shared following the latest inflation data, said it expects the central bank “to keep interest rates unchanged at the June MPC meeting, taking into account recent macroprudential tightening with reduced caps on lending growth.”
“Nevertheless, ongoing geopolitical uncertainties and domestic political developments may call for a more cautious approach, which could lead to an upward adjustment in the policy rate – from 37% to the current effective funding rate of around 40%,” it added.
Türkiye’s micro export volume has grown nearly 15-fold over the past 10 years, the Trade Ministry said in a written statement on Sunday, suggesting that the global market presence of producers, entrepreneurs, and the e-export ecosystem has notably increased.
In a written statement on the report dubbed “Export Routes 2025 under the Simplified Customs Declaration,” the ministry said the report provides comprehensive data and detailed analysis of Türkiye’s development in cross-border e-commerce, highlighting the strong performance of micro exports in recent years.
Micro exports refer to small-volume, low-value international trade transactions. Designed for e-commerce and small and medium-sized enterprises (SMEs), they usually bypass traditional red tape through simplified digital declarations.
The statement said that the report includes comprehensive assessments of which products are shipped to which countries under micro export schemes, country-based consumer preferences, unit sales values of products, sectors in which Turkish sellers are strong, and product groups with development potential.
It also provides a detailed analysis of returned goods in micro export transactions, it added.
It also stated that the study examines the distribution of marketplace and non-marketplace sales, as well as the use rates of road, air, Ro-Ro, and maritime transport in micro exports.
The statement highlighted that while there has been a contraction in some markets, demand for Turkish products in certain countries has increased significantly.
“In an era where protectionist policies are gaining strength in global cross-border e-commerce, the increase in our country’s parcel volume is important as it demonstrates the adaptability of our companies to digital trade and their international competitiveness,” it further said.
“Thanks to the simplified customs declaration system, access to global markets is becoming easier, especially for small and medium-sized enterprises, women entrepreneurs, and young entrepreneurs, while Türkiye’s production capacity is becoming more visible globally through digital trade channels,” it added.
The ministry also emphasized that it would continue to strengthen the e-export ecosystem, develop trade-facilitating practices, and support entrepreneurs in expanding their global presence in the coming period.
The staggering costs of Israel’s multi-front war and Prime Minister Benjamin Netanyahu’s vision of turning his country into a “Super-Sparta” of the Middle East are driving up the defense budget and raising fears of cutbacks in education and health care.
The total cost of the attacks and involvement in a series of interconnected regional conflicts after Oct. 7, 2023, stood at 405 billion shekels ($138 billion) as of late April, according to the governor of the Bank of Israel, Amir Yaron.
“That’s a huge figure, more than 17% of GDP (gross domestic product),” he said during a recent economic conference in Herzliya, north of Tel Aviv.
Just the military campaign against Iran, which began with a wave of U.S.-Israeli strikes on Feb. 28, incurred an additional cost of 35 billion shekels for the state up until a cease-fire took effect on April 8, according to an initial estimate by the country’s finance ministry.
Following the adoption of the 2026 budget in late March, the government noted the defense ministry’s budget had more than doubled since October 2023, when Tel Aviv escalated attacks on Gaza.
To support the war effort, the government borrowed heavily in international markets in 2024 and 2025.
It has reached the point where public debt now accounts for more than 69% of GDP, compared to 60% before the war, according to the Treasury.
Taxes and social security contributions have also increased.
‘Paying twice’ for war
Israelis are “paying twice” for the war, said Esteban Klor, an economics professor at Jerusalem’s Hebrew University.
The first cost, he told AFP, is via the decline in government social spending and reduced investment in public services resulting from several successive “across-the-board” budget cuts, even as “we are … increasing the debt.”
“Education will suffer, the quality of infrastructure will decline, as will the performance of the health care system,” he said.
The second cost is to economic growth, though this has been less visible as the Israeli economy overcame the initial shock of the war. GDP had returned to its 2022 level by 2024, and it continued to grow.
However, the economy shrank at an annualized rate of 3.3% in the first quarter of 2026, reversing earlier growth and marking a downturn driven by the conflict with Iran.
The ongoing mobilization of tens of thousands of reservists since October 2023 is also taking a toll.
“Since … many of our workers are in the army rather than at their jobs, this affects production,” Klor explained.
According to a survey published on June 1 by the Israel Democracy Institute (IDI) think tank, 31% of respondents said they had experienced a decline in their wages or income since Oct. 7, 2023.
The phenomenon is hitting the self-employed and lowest-income workers the hardest.
At the Herzliya conference, the deputy head of budgets at the finance ministry, Tamar Levy-Boneh, warned against a “trauma economy,” in which the sense of shock and failure from Oct. 7 leads the military to constantly demand more funding to ensure the country’s security.
“The security establishment must learn to meet its needs in a way that does not undermine the standard of living and must assume its share of responsibility,” Levy-Boneh said.
‘Super-Sparta’
But Netanyahu advocates the opposite view.
In September 2025, he said Israel had no choice but to become a “Super-Sparta,” a reference to the ancient Greek city-state devoted entirely to war.
As divergences emerge between Netanyahu and U.S. President Donald Trump regarding Israel’s offensive in Lebanon, which it conducts with the pretext of fighting Hezbollah, and how to end the war with Iran, the Israeli premier is pushing for greater self-sufficiency.
Under his vision, Israel would gradually wean itself off its reliance on the massive military aid it receives from the United States.
He confirmed as such on May 3, vowing to invest 350 billion shekels over the next decade in the national defense industry to ensure “overwhelming aerial superiority.”
Economics professor Klor warned that the defense budget could exceed 10% of GDP and called for a swift return to a “more reasonable” level.
Israel is one of the developed countries where inequality is most glaring, and the dragging war is not helping.
According to the latest available study by the Israeli National Insurance Institute, the proportion of children living below the poverty line rose from 27.6% to 28% between 2023 and 2024.
Türkiye’s banking sector posted a net profit of TL 363.3 billion (nearly $7.9 billion) in the first four months of the year, official data showed on Friday.
That marks a 37.3% increase from the same period a year ago, according to the Banking Regulation and Supervision Agency (BDDK).
The sector’s total loan portfolio, its largest asset category, increased 10.6% from the end of 2025 to reach TL 25.6 trillion by the end of April.
Total assets rose 7.4% over the same period, climbing to TL 50.4 trillion, the data showed.
Bank deposits also expanded, rising 7.1% from year-end 2025 to TL 29.2 trillion as of April.
Meanwhile, the sector’s capital adequacy ratio stood at 16.37% at the end of April, down 0.14 percentage points from the previous month and 3.32 percentage points lower than at the end of 2025.
Despite the decline, the capital adequacy ratio, a key measure of banks’ financial strength and ability to absorb losses, remained above regulatory minimum requirements.
Türkiye’s competition watchdog on Friday said it had launched an investigation into Meta over its artificial intelligence practices and imposed an interim measure on the tech giant.
The investigation covers the economic entity comprising Meta Platforms, Inc., Meta Platforms Ireland Limited, WhatsApp LLC, and Meta Platforms Istanbul Bilişim Hizmetleri Ltd.
The Competition Authority (RK) said the decision followed a preliminary inquiry into whether Meta violated the competition law.
The probe will assess whether the company breached rules by integrating its Meta AI service into WhatsApp and restricting third-party AI providers from offering services through the messaging platform.
Interim measure
During the preliminary inquiry, the board said it found serious indications that Meta’s practices prevented third-party general-purpose generative AI chatbots and assistants from providing services through WhatsApp as a primary platform, potentially constituting a violation of competition rules.
To prevent irreparable harm pending a final decision, the board imposed an interim measure.
Under the ruling, Meta must establish conditions enabling third-party general-purpose generative AI chatbots and assistants to provide services through WhatsApp as a primary platform.
The authority said those conditions must not create de facto or economic obstacles that would hinder the provision of such services.
If Meta fails to comply with the obligations set out in the interim measure within one month of receiving the reasoned decision, the company will face administrative fines.
Electricity consumption linked to electric vehicle (EV) charging services reached a record high in Türkiye during the recent Eid al-Adha holiday, according to official data that affirms the unprecedented expansion of battery-powered cars.
Between May 22 and May 31, a total of 31.8 million kilowatt-hours (kWh) of electricity was consumed at 44,139 charging points across the country, the Energy Market Regulatory Authority (EPDK) data showed.
That marks a whopping 193.6% increase from the same period a year ago.
The sharp increase reflected the rapid expansion of EV adoption and charging infrastructure in Türkiye.
The total number of registered electric cars in Türkiye has reached more than 420,000. The count is estimated to reach 6 million by 2035, according to officials.
During the Eid al-Adha holiday, more than 1.06 million charging sessions were recorded nationwide, while total charging time exceeded 1.04 million hours, both marking all-time highs.
Compared with the 2025 holiday period, the number of charging sessions increased by 103.4%.
EV charging usage multiplies
Electricity consumption during the Eid al-Adha period has risen sharply in recent years.
It stood at 3.6 million kilowatt-hours in 2024, before rising to 10.8 million in 2025.
The total charging duration during the same periods was 140,935 hours in 2024 and 412,461 hours in 2025.
The number of charging sessions stood at 183,891 two years ago, before skyrocketing to 522,913 during the same period in 2025.
Meanwhile, the number of charging points rose 42.43% year-over-year to 44,139 this year. The count stood at 19,761 during the same period in 2024.
According to January-May data, sales of fully electric cars in Türkiye rose 11% year-over-year to 65,805 units, accounting for 18.5% of the total market.
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