ANKARA: Turkey’s economic growth is expected to fall to 2.0 percent in the third quarter of the year and hit 2.8 percent for all of 2018, according to a Reuters poll, as record-high inflation and the lingering effects of a currency crisis continue to take a toll on the economy.
The lira has collapsed more than 40 percent against the U.S. dollar this year, pushing up prices across the board and sending annual inflation to nearly 25 percent, its highest rate in 15 years.
While the lira has started rebounding thanks to measures taken by the government and central bank, the recovery has been limited. Inflation fell from its record rate in November, but still stood above 20 percent.
Turkey’s economy surged 7.4 percent in the first quarter of this year and 5.2 percent in the second half, but economists expect the slowdown to become more apparent in the third quarter.
The average of a Reuters poll of 15 economists had the economy expanding 2.0 percent in the third quarter.
“It will be a quarter in which the changes in the composition of growth will pick up important pace,” said Ozlem Bayraktar Goksen, chief economist at Tacirler Yatirim.
“The contribution of net exports is actually the only reason we are posting positive growth. Composite indicators for both investments and consumption have given signals of the significant deterioration in the third quarter,” Goksen said.
A Reuters poll of 46 economists in October had suggested that growth would fall short of sharply lowered government forecasts this year and next, and officially enter a recession – defined as consecutive quarters of negative growth – in early 2019.
“We see the outlook for the coming quarters as more negative. Our growth forecast for 2018 is 2.8 percent, and we expect 1.5 percent for next year,” Goksen said, adding that the risks were on the downside.
Finance Minister Berat Albayrak announced in September that the government saw 3.8 percent growth this year and 2.3 percent in 2019. A central bank poll last month put growth forecasts at 3.1 percent for 2018.
Last year, Turkey’s GDP grew 7.4 percent.