The tale of 'rising' under the burden of debt

Melisa AY

AKP President Recep Tayyip Erdoğan once again delivered a message of "boost" while commenting on current economic developments. While Erdoğan claims that the World Bank will classify Turkey as a high-income country, the country currently falls into the upper-middle-income group.

Data from the World Bank's Global Findex 2025 report has once again highlighted the country's debt crisis. The Global Findex database, the most comprehensive financial trends survey ever developed through surveys conducted by the World Bank in its countries of operation, revealed that 42 out of every 100 adults in Türkiye are indebted to banks and financial institutions.

According to the report, 82 percent of the surveyed adult population in Türkiye have a bank or mobile money account. Half of these individuals are in debt. While the number of account holders in the country has increased from 59 percent in 2011, citizens use their accounts primarily for collecting wages or depositing social benefits, not for savings or investments.

CREDIT CARD USAGE IS AT ITS PEAK

Turkey has successfully entered the "league of countries with high credit card usage." While credit card usage in countries defined by the World Bank as "low- and middle-income economies" remained at 15% over the past 12 months, the report notes that Argentina, Brazil, China, Turkey, and Ukraine are exceptions, with at least 25% of adults using credit cards in these countries.

Last year, high interest rates shifted credit trends in favor of credit cards. High financing costs and the difficulty of accessing and repaying bank loans increased the prevalence of credit card use. The report stated, "Credit cards dominate as the official source of credit in these countries. The proportion of people who have credit card debt , even without official loans from financial institutions, is 70 percent in Turkey, approximately 60 percent in Argentina and Brazil, and approximately 50 percent in Ukraine."

While Türkiye leads the country in credit card debt, the data also reflects the difficulty of repayment. Thirty out of every 100 people in the country reported being unable to pay their card debt in full. In China, only 1 in 10 account holders reported not having paid their card debt in full.

DEBT IS HIGH, NOT SAVINGS

Citizens unable to pay their debts were also unable to save. The percentage of adults in Turkey with savings in bank accounts was found to be 28%, falling short of countries like Gabon, Kenya, and Bulgaria. Despite high interest rates, savings accounts remained empty. The report highlighted short-term, "under-the-mattress" savings, such as gold and foreign currency, as a key savings trend among adults in Turkey.

According to the report, debt is generally used for consumption purposes in Türkiye due to high inflation and insufficient income, and 35 percent of adults participating in the survey said they would not be able to make ends meet for three months in the event of an unexpected expense.

Adult financial situation (Official debt and savings) (%)

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WHICH COUNTRY DID ERDOĞAN MENTION?

AKP President Recep Tayyip Erdoğan, in statements he delivered to reporters on his return from the Shanghai Summit, once again claimed the economy was "booming." Commenting on economic indicators, Erdoğan summarized, "Unemployment rates are in single digits, our reserves are at record levels, and inflation continues to decline. It's highly likely that we will enter the group of high-income countries this year, according to the World Bank's definition of per capita income. Our country will have moved up the ranks in terms of per capita income." Erdoğan's claims didn't align with the reality of Turkey. While the broadly defined unemployment rate, defined by the Turkish Statistical Institute (TÜİK), reached an all-time high of 32.9 percent in June, it only fell from its peak to 29.6 percent in July. Erdoğan's claims of "falling inflation" don't even align with the unreliable TÜİK data. Inflation, far from targets, continues its high double-digit trend. In July, the annual inflation rate reached 33.52 percent, a decrease of only 4.68 percentage points from the 38.2 percent level when Treasury and Finance Minister Mehmet Şimşek took office. The inequitable distribution of per capita income means that the increase is not reflected in the public interest. According to current data, the Gini coefficient, which indicates inequality, is 0.413, indicating a significant deterioration in distribution, while the highest-income group's share of total income is calculated as 48.1 percent. This increased per capita income has gone to the pockets of the wealthiest 20 percent, not the low-income group.