Turkey’s economy contracted 11.8 pct in second quarter: report

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Photo by M. B. M. (Unsplash)

Turkey’s economy contracted nearly 12 percent in the second quarter due to the coronavirus lockdown, a Reuters poll showed on Friday.

The figure indicates the worst year-on-year economic performance for the country in more than a decade.

A Reuters poll of 14 economists produced a median estimate for an 11.8 percent contraction in gross domestic product (GDP).

Estimates ranged from declines of 7.1 percent to 13.1 percent.

The country’s economy grew 4.5 percent year-on-year in the first quarter of 2020, just before the pandemic brought on a downturn in March.

The second quarter saw a near standstill economy as Ankara shut schools and some businesses, closed borders and adopted weekend stay-at-home orders. Some factories halted production until June.

The second quarter contraction, coupled with a severe hit to the vital tourism sector, led to forecasts expecting the economy to shrink for the full year.

Turkey’s economy last contracted annually during the global recession in 2009, by 4.7 percent.

GDP growth had since averaged more than 5 percent, propelled by cheap foreign funding and a construction boom until a currency crisis in 2018 prompted another recession.

The central bank — which has cut rates aggressively since mid-2019 — has held policy steady the last few months as the lira dropped to record lows, threatening more significant problems for the economy.

The Turkish Statistical Institute will release second quarter GDP data at 0700 GMT on Aug. 31.

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