Türkiye’s construction sector shrank 1.9% in the second quarter of 2026, ending a 14-quarter streak of uninterrupted growth. Turkish Contractors’ Association President Erdal Eren attributed the contraction to tight financing conditions, high borrowing costs, restrictions on public investment allocations and rising costs.

ISTANBUL — August 31, 2026

Türkiye’s construction sector contracted in the second quarter of 2026, bringing an end to its 14-quarter period of uninterrupted growth.

According to data from the Turkish Statistical Institute (TÜİK), Türkiye’s economy expanded 2.3% year-on-year in the second quarter, while construction activity declined 1.9%.

Commenting on the figures, M. Erdal Eren, President of the Turkish Contractors’ Association (TMB), said the sector had been under pressure for some time due to limited access to financing, high costs and restrictions on public investment allocations.

Tight Financing Conditions Weigh on Sector

Eren said tight financing conditions and high credit costs, together with a cautious approach to private-sector investment, had played a major role in reversing the construction sector’s growth momentum.

He emphasized that companies in the sector continue to face difficulties accessing financing, while elevated borrowing costs are limiting investment appetite.

Earthquake Reconstruction Boost Has Weakened

Eren noted that reconstruction efforts in the earthquake-hit region following the 2023 earthquakes, along with publicly funded infrastructure investments, had provided significant support to the construction sector in 2023 and the years that followed.

However, he said the contribution from these projects had become relatively more limited by 2026.

According to Eren, the slowdown in public resources has not been sufficient to offset the decline in construction activity financed by the private sector.

Calls for Easier Access to Financing

The TMB president said steps should be taken to facilitate access to financing, ease cost pressures and reconsider restrictions on allocations for public investments.

Eren said implementing such measures would help the construction sector return to positive growth and continue contributing to Türkiye’s overall economic expansion.

The contraction marks a notable change for the sector, which had maintained uninterrupted quarterly growth for 14 quarters before the second quarter of 2026.

Source: Patronlar Dünyası/ Prepared by: İlayda Gök