Turkish economic growth fades to 1.6 pct in Q3 amid currency crisis

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Photo by M. B. M. (Unsplash)

Turkish economic growth dwindled to 1.6 percent year-on-year in the third quarter, data showed on Monday, falling short of forecasts as a currency crisis and soaring inflation led to the worst economic performance in two years, Reuters reported.

Turkey, a major emerging market once seen as a star performer by international investors, racked up growth of more than 7 percent last year. But this year it has been battered by a lira sell-off that has driven up the costs of food and fuel and forced the central bank to hike its main rate to 24 percent.

The construction sector — long a beneficiary of Turkey’s credit-fueled building boom — contracted 5.3 percent year-on-year, the data showed, countering a 4.5 percent expansion in services.

In a Reuters poll, economists had forecast third quarter growth of 2.0 percent year-on-year. The lira eased to 5.3047 against the dollar after the data from 5.2950 beforehand.

It was the worst quarterly performance since the third quarter of 2016 — when Turkey was shaken by an attempted coup against President Recep Tayyip Erdoğan.

Output shrank a seasonally and calendar-adjusted 1.1 percent from the previous quarter, the data showed.

Revised data showed the economy had expanded 5.3 percent year-on-year in the second quarter, from a previously reported 5.2 percent.

The lira has slumped 28 percent against the dollar this year, but has rebounded from record lows in August when it was as much as 47 percent weaker against the US currency.

The lira crisis sent annual inflation to more than 25 percent in October, its highest rate in 15 years, before easing in November.

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