Levent Gürses
Alongside the economic crisis that has been ongoing in Turkey for years, the country is experiencing severe drought and water shortages in cities. With no rain falling for weeks across much of the country, reservoir levels in cities have rapidly declined. In Uşak, water has completely run out and water shortages are being experienced. The water in the Küçükler Reservoir, which supplies drinking water, has completely run out and water cuts are being experienced, with water only available between 4pm and 10pm.
It is noted that Tekirdağ, where the reservoir capacity has dropped to 1%, is next in line and that water supply is imminent, while reservoir capacities in some critical provinces are as follows: Ankara: 8.16 per cent, Izmir: less than 10 per cent in four reservoirs, Hatay: 13 per cent, Konya: 15 per cent, Adana: 16 per cent, Bursa: 18 per cent…
The situation in Istanbul is relatively better, with an average reservoir capacity of 41.5 per cent. However, at the end of August last year, this rate was 46.5%.
According to the Meteorological Service’s drought map for the last 12 months, most of Turkey is experiencing “severe” and “exceptional drought”. Central Anatolia, the interior of the Aegean region and Southeast Anatolia are particularly alarming.
The General Directorate of Meteorology (GDM) has released a 12-month meteorological drought map covering the period from July 2024 to July 2025. Drought is at its highest level in Central Anatolian provinces such as Aksaray, Niğde, Nevşehir, most of Kayseri, Yozgat, Kırıkkale and Ankara, including Konya, Turkey’s breadbasket.
The inland areas of the Aegean, Manisa, Uşak, Afyonkarahisar, Kütahya and Denizli regions, as well as the inland areas of the Mediterranean, Isparta, Burdur and the north-east of Antalya, were also among the regions most severely affected by drought.
While severe drought prevailed in Şanlıurfa, Mardin, Diyarbakır and their surroundings, the regions around Hakkari and Şırnak were categorised as ‘extremely dry’.
Drought affected the Marmara Region to varying degrees. Thrace and Edirne were classified as experiencing extreme drought.
Drought and water shortages are affecting agricultural production. Drought in Adana, Konya and Thrace, which are important agricultural production centres in Turkey, is causing a significant drop in yields. For example, drought and extreme heat have reduced tomato production in Şanlıurfa. In the districts of Siverek and Hilvan, producers who failed to achieve the expected yield from approximately 200,000 acres of tomato cultivation last year due to drought have cultivated 100,000 acres this year.
The President of the Water Policy Association, Dursun Yıldız, stated that regions experiencing regional drought have entered the upcoming water year with empty reservoirs and that if the following year is also dry, the country will face much heavier costs. “Crisis management in water is very difficult. The main thing is to conduct a risk analysis for water and work to manage potential risks. If you are late and inadequate in taking the necessary measures to manage risk, you will be forced to implement water cuts when a water crisis occurs. This means surrendering to the water crisis rather than managing water.”
Yıldız said, “Turkey’s water management has emerged as a multi-headed, fragmented structure with a lack of coordination. Efforts to draft a Water Law, which began about 12 years ago to address this and other legal shortcomings in water management, have not yet been completed. On the other hand, the General Directorate of Water Management, established in 2011, has prepared numerous strategies and action planning reports on basin-scale protection, water allocation, flood management, and drought management. However, these have not been implemented.”
Last week’s key developments were as follows:
Bahçıvan: Industry grew by only 0.5 per cent; comprehensive reforms are needed
Erdal Bahçıvan, President of the Istanbul Chamber of Industry (ISO), stated that industrialists were paying a heavy and unfair price, noting that they were facing credit interest rates well above inflation.
Touching on the issues of unprofitability and inefficiency in industry, in addition to high interest rates, Bahçıvan called for comprehensive reforms. The ISO Assembly’s August meeting, with the main agenda item being ‘Seeking Solutions to Our Industry’s Problems with a New Generation Perspective,’ was held with the participation of Deputy President Cevdet Yılmaz.
Bahçıvan stated that the persistently high real interest rates and restrictions on bank loans have created serious difficulties in accessing finance, adding, “This continues to limit profitability by weakening domestic demand and putting pressure on profitability. We see this when we look at the growth figures. While economic growth stood at 3.2 per cent in 2024, the industrial sector grew by only 0.5 per cent. Indeed, the ISO Turkey Manufacturing PMI and Sectoral PMI data we publish every month also point to a continuous deterioration in the operating conditions of our industrial sector for 16 months.”
Bahçıvan said, “Turkey’s industrial companies need a selective, performance-oriented transformation programme that rewards productivity in production processes. We believe that today there is a much more favourable atmosphere for discussing the structural problems in our production life and implementing the reform agenda.”
Currency-protected deposits are over, leaving behind a debt burden
The Currency-Protected Deposit (CPD) scheme has officially ended. It leaves behind a hefty bill of approximately $60 billion. Launched on 21 December 2021, the scheme was introduced to curb the dollar, but it failed to go beyond being a burden on the Treasury. No new CPD accounts can be opened, and existing ones cannot be renewed. The cost of the system, which provided huge gains to the wealthy, has burdened citizens with a load exceeding billions of lira.
It is estimated that the total amount of money released by the Treasury and the Central Bank exceeded 1 trillion TL. This amount corresponds to approximately 60 billion dollars. In 2022, 224.8 billion TL was spent directly on CPD from public resources, and in 2023, approximately 833 billion TL was spent.
The total amount of KKM accounts decreased by 13 billion 436.8 million lira as of last week, falling to 427 billion 125.9 million lira.
Significant increase in enforcement and bankruptcy cases: Over 24 million!
According to data from the Ministry of Justice, the number of enforcement and bankruptcy cases reached 24 million 441 thousand as of 20 August 2025, an increase of 2 million 185 thousand since the beginning of the year. In the first 20 days of August alone, the increase in the number of cases exceeded 232 thousand. Economic difficulties and problems accessing cash have made it harder to meet obligations, increasing the caseload in the courts.
CHP’s Bulut: The only things rising are debt, interest and enforcement files
CHP Deputy Chairman Burhanettin Bulut criticised the government’s economic policies, saying, “Today, there are exactly 24 million 450 thousand files in the enforcement offices. In the last year alone, 1,826,000 new enforcement files were opened. While the government tells fairy tales about “the economy soaring and growing”, the only things growing are debt, interest and enforcement files. People can no longer put bread on the table; young people are unemployed, and shopkeepers are closing their doors.”
Civil servants face poverty wage increases, unions protest…
Six and a half million public sector workers and pensioners have been condemned to poverty by the Arbitration Board’s decision. According to the decision reached at the meeting, the 11% + 7% offer for 2026 was accepted as is. For the first six months of 2027, the offer was increased by only 1 percentage point.
Accordingly, there will be an 11% increase for the first half of 2026, a 7% increase for the second half, a 5% increase for the first half of 2027, and a 4% increase for the second half. In addition, base monthly salaries will be increased by 1,000 TL in the first six months of 2026.
There is no right to appeal the board’s decision, which is stipulated in the collective agreement. The government’s pay rise for civil servants and civil servant pensioners was protested in Ankara. The United Public Workers’ Confederation made a statement in front of the Ministry of Treasury and Finance. General President Orhan Yıldırım recalled that 7 of the 11 members of the Arbitration Board were appointed by the President himself, stating that a system had been established in which workers could never win, along with the ban on strikes.
KamuAr: Food prices have been rising for 63 consecutive months
The Research and Development Unit of the United Public Sector Workers’ Confederation (KamuAr) has released its August 2025 report on the food price index, which is based on a basket of 64 basic food items most consumed by the public, compiled from prices collected from chain supermarkets with widespread branches in Turkey. The report stated that food prices rose by 3.2 percent this month compared to last month, with prices increasing by 27 percent over the eight months of the year, and that the annual increase in food prices, which have been rising for 63 consecutive months, was 54.5 per cent.
It was emphasised that food prices have increased by 1,313 percent from September 2021, when Turkey was dragged into an inflation spiral, to August 2025.
The trade deficit increased by 12.2 percent in the first seven months of the year
In July, the foreign trade deficit decreased by 11.8 per cent compared to the same month of the previous year, falling from $7.305 billion to $6.444 billion. Exports increased by 11 per cent to $24.938 billion, while imports rose by 5.4 per cent to $31.383 billion.
In the January-July period, exports rose by 5.1 per cent to $156.317 billion, imports increased by 6.9 per cent to $212.220 billion, and the foreign trade deficit rose by 12.2 per cent to $55.903 billion.
The export-to-import coverage ratio was 75.5 per cent in July 2024 and was determined to be 79.5 per cent last month. It was 74.9 per cent in the January-July 2024 period and fell to 73.7 per cent in the same period this year.
Overdraft accounts have become a lifeline, with 30 million users
Overdraft accounts (KMH) have become one of the most frequently used borrowing tools in recent times. Used by 27.7 million people in June 2023, KMH accounts increased by 2.6 million people over the following two years, reaching 30.3 million people as of June. In June, 177,000 people started using KMH for the first time. According to a report by Birgün newspaper, the average KMH debt balance per person has increased approximately 4.5 times over two years, rising to 19,996 lira.
The interest rate applied to KMH accounts is 4.75 per cent. When the Bank Insurance Transaction Tax (BSMV) and the Resource Utilisation Support Fund (KKDF) are added, the interest rate rises further. After using a 30-day credit deposit of 10,000 lira, the amount to be repaid is 10,617 lira.
Credit card debts amount to 2.3 trillion lira
According to BDDK data, the total credit volume of the banking sector rose to 20 trillion 290 billion TL in the week of 15 August, with an increase of approximately 4.3 trillion TL in credit volume since the beginning of the year. Consumer loans, however, decreased by 8 billion TL compared to the previous week, reaching 2 trillion 446 billion TL, while a 324 billion TL increase compared to the beginning of the year was notable. Individual credit card debts amounted to 2 trillion 357 billion TL. Overdue individual credit card debts reached 99.8 billion TL.
High technology accounts for only 3.5% of industrial production
According to TÜİK’s 2024 industry and services statistics, the majority of enterprises are service and trade-oriented, and the country’s economy is stuck with a low-tech industry… According to preliminary data, 44.4% of active enterprises in 2024 were in the services sector, while 35.1% were in the trade sector. The services sector’s share of total employment was 39.2%, while the industrial sector’s share was 27.2%. It was stated that there were 3,942,781 active enterprises in Turkey in 2024.
According to a report in Birgün newspaper, the data revealed that the industry is stuck in low technology and also showed that the economy’s capacity to create ‘added value’ is limited. Fifty-four point seven per cent of enterprises in the manufacturing industry were engaged in low-tech activities. These enterprises accounted for 48.5 per cent of employment and 35.9 per cent of turnover.
Prof. Dr. Yalçın Karatepe, Deputy Chairman of the CHP responsible for economic affairs, emphasised that 70% of manufacturing industry production took place in low and medium-low technology industries, stating, “High technology accounts for only 3.5% of production. From the perspective of added value, a similar situation exists, with 66% of added value coming from low-tech industries and only 5.5% from high-tech industries.”
Turkey’s first luxury shopping centre closes
Prestige Mall, the first luxury and boutique shopping centre in Bahçeşehir, Istanbul, has closed due to economic problems and management difficulties. Employees of the shopping centre, which had an occupancy rate of less than 50 per cent in recent years, said that the balance between income and expenditure had been disrupted and that salaries had therefore been delayed for a long time. Prestige Mall, launched by the Süzer Group, was sold to the Irish Quinn Group for $55 million shortly after its opening in 2007, and was taken over by Russian-owned MSFD Gayrimenkul A.Ş. in 2013.
Trump sacked a Fed member, causing further turmoil
US President Donald Trump is experiencing increasingly heightened tensions with the Federal Reserve (Fed). After harshly criticising Fed Chairman Jerome Powell for not lowering interest rates, Trump has now taken things to a new level by attempting to remove Board Member Lisa Cook from her position. Trump announced that he was removing Cook because she had ‘made false statements in mortgage contracts’.
Cook, however, announced she would not resign and took the matter to court. Suing Trump for attempting to remove her from office, Cook asked the court to declare Trump’s removal decision ‘illegal and invalid’ and named Fed Chairman Jerome Powell and the Board of Governors as defendants.
Trump’s statement that ‘we will get the majority very quickly’ revealed his goal of taking control. It is noted that the lawsuit could lead to a series of legal battles that could end up in the US Supreme Court, further fuelling debates about the Fed’s independence.
Neighbouring country transitions to a four-day work week system
The Greek Ministry of Labour has presented an 88-article bill to the public that paves the way for a four-day, 10-hour work week. The draft law includes a four-day, 10-hour work week, up to 13 hours of daily work, flexible working hours through individual contracts, and new regulations on overtime pay.
The law, which provides for a four-day work week, does not reduce working hours but rather paves the way for a flexible working model. According to the bill, employees will be able to work 10 hours a day, four days a week, throughout the year. Furthermore, under the new regulation, employees who voluntarily agree will be able to work up to 13 hours a day. Employees will be paid 40 per cent more than their hourly wage for overtime. Overtime will be limited to 4 hours per day and 150 hours per year.
The US economy grew above expectations
The US economy grew by 3.3 per cent annually in the second quarter, exceeding expectations. The economy was expected to grow by 3 per cent. Preliminary data released last month had predicted that the US economy would grow by 3 per cent in the second quarter.
The US economy had contracted by 0.5 per cent in the first quarter of this year. The decline in imports and the increase in consumer spending contributed to the growth of the country’s economy in the second quarter of the year. Investments and exports declined during the same period.
Tesla sales plummeted in Europe
Tesla sales in European Union (EU) countries fell sharply by 42.4 per cent in July. The decline in Tesla sales in European countries reached its seventh month in July. Tesla sales in EU countries, which stood at 11,465 in July last year, fell to 6,600 in the same month this year. Thus, Tesla sales in the EU market fell by 42.4 per cent in July compared to the same month last year.
Corruption scandal in Argentina, stone-throwing attack on Milei
Corruption scandals rocking the inner circle of Argentine President Javier Milei, who has been experimenting with the economy by cutting social spending and increasing unemployment to reduce inflation, have sent markets into turmoil ahead of the election.
Argentina’s international dollar bonds fell to their lowest level in months at the start of the week, while stocks and the peso lost value. Audio recordings allegedly belonging to Diego Spagnuolo, president of ANDIS, an organisation for people with disabilities, mentioning bribes, caused outrage. Spagnuolo, Milei’s former lawyer and close friend, claimed in the recordings that the president’s sister and chief of staff, Karina Milei, had accepted bribes. While government officials did not confirm the authenticity of the recording, Spagnuolo was later dismissed by Milei.
Meanwhile, Milei was attacked with stones and sticks. The President barely escaped unharmed. While travelling in an open-top vehicle in the Lomas de Zamora district of Buenos Aires, stones and bottles were thrown at Milei’s convoy. The security team quickly removed Milei from the vehicle and placed him in an armoured car. Two people were arrested. During the protest, Milei was accompanied by his sister, Karina Milei, whose name has been mentioned in a corruption scandal.
Critical local elections will be held in the Buenos Aires province of Argentina on 7 September. As the country’s most populous province, the outcome of the elections will directly affect not only local politics but also the national political balance.
Some important developments from Turkey and around the world are briefly as follows:
– The economic confidence index rose by 1.7 per cent in August to 97.9. However, despite the increase in August, the index remained below the critical threshold of 100, continuing the pessimistic picture.
– According to TÜİK data, 3.9 million businesses operated in Turkey in 2024, employing 19.7 million people. The services sector led in terms of businesses and employment, while the trade sector topped the list in terms of turnover. The manufacturing sector led in terms of production value, while low-tech activities gained prominence in industry.
– The US Department of Commerce made the temporary anti-dumping duty imposed on corrosion-resistant steel products from 10 countries, including Turkey, permanent. Accordingly, the 15.18% anti-dumping duty rate set for Turkey in April will be applied permanently.
– CHP Kayseri MP Aşkın Genç stated that the AKP had increased the private sector’s external debt from $45 billion in 2002 to $287 billion in 2025, saying, ‘Turkey has transformed from an economy growing with its own resources into an economy dependent on debt. Growth through debt is mortgaging the future.’
– The Ministry of Trade has changed customs duties to speed up industrialists’ access to sunflower oil and keep oil prices under control. As of 1 October, customs duties will be 12 per cent on sunflower seed imports and 30 per cent on crude sunflower oil.
– The number of foreign visitors to Turkey in July fell by 5 per cent compared to the same month last year. The number of foreign visitors in July was recorded as 6,969,546.
– The employment index for the manufacturing, construction and trade-services sectors combined increased by 1.9 per cent in the second quarter of 2025 compared to the same quarter of the previous year. When examining the sub-sectors, the index decreased by 2.2 per cent in the manufacturing sector, increased by 6.7 per cent in the construction sector and increased by 3.2 per cent in the trade-services sector.
– Türk Telekom announced that it will be able to update its wholesale rates twice a year in line with the BTK Board Decision dated 31 July 2025. The updates will take the CPI into account, and the regulation will apply from 1 July 2026.
– MLP Health Services (MLP Care), which owns hospitals such as Medical Park and Liv Hospital, acquired the Private Medistanbul Hospital in Sultangazi. The hospital, which has a closed area of 35,000 square metres and a capacity of 62 beds, has been renamed Private Medicalpark Tem Hospital.
– Workers at Boeing’s defence facility in St. Louis have been on strike since 4 August for wage increases and pension rights. F-15 and F/A-18 fighter jet production has halted due to the strike, with the union demanding terms similar to the Seattle agreement.
– California-based artificial intelligence chip manufacturer Nvidia’s revenue rose 56 per cent year-on-year to $46.7 billion in the three months, exceeding market expectations.
– China aims to reduce its dependence on US-based Nvidia by tripling its artificial intelligence chip production. Huawei plans to begin manufacturing at a facility producing artificial intelligence chips by the end of this year and will open two more production facilities for this purpose next year.