For the first time in nine years, Turkey has been hit by a recession as economic growth prospects continue to get slimmer and slimmer.
The latest economic bad news is also that of US investment bank, JP Morgan, which has now reduced Turkey growth forecast for 2019.
The pointed out that due to a current weak economic performance, the Turkish economy is expected to contract this year. It then went further and reduced growth forecast from 1.2 percent to negative growth of 0.9 percent.
Banco Bilbao Vizcaya Argentaria (BBVA), a bank based in Bilbao, Spain, announced Turkey is only expected to grow by one percent growth.
The Turkish Statistical Institute (TÜİK) shared the latest data showing the economy shrunk by 3% year-on-year and 2.6 % annual growth recorded for the last year. Households’ consumption fell by 8.9 percent in the fourth quarter of 2018.
The Turkish economy grew by 2.6 percent last year despite the government’s estimate of 3.8 percent. Moreover, Ankara’s growth forecast for 2018 and 2019 were 5.5 percent initially.
The Turkish Lira lost a historical 40 percent against the US dollar due to tense diplomatic relations between Turkish President Recep Tayyip Erdogan and US President Donald Trump.
The Lira’s lost against major foreign currencies made imports very costly and the central bank increased the interest rate. This increased borrowing cost negatively, affecting housing and car sales.
As grave economic crises continue to hit Turkey, major multinationals have either completed or sought almost $24 billion in loan restructurings.
A Bloomberg report said Turkey’s first recession in a decade just before the upcoming March 31 local election risks putting the central bank back into Erdogan’s line of fire as the president always interferes with the bank’s independence.
While the Turkish market is hit by the economic recession, the Trade Minister Ruhsar Pekcan tried and failed to calm the market last week by releasing unofficial foreign trade result for February.
“Despite all problems in global trade, we had the highest February export figure in Turkey’s history. Exports increased by 5 percent in the first two months of the year, while imports decreased by 23.1 percent,” Al-Monitor reported Pekcan’s positive comment on Turkish economy.