Turkey’s economy is expected to have severely contracted nearly 12% in the second quarter due to the coronavirus lockdown, a Reuters poll showed on Friday, logging its worst year-over-year performance in more than a decade.
The median estimate in a Reuters poll of 14 economists was for an 11.8% contraction in the gross domestic product (GDP), with estimates ranging from declines of 7.1% to 13.1%.
The Turkish economy grew 4.5% year-on-year in the first quarter of 2020, propelled by a lending spree just before the pandemic brought on a sharp downturn beginning in March.
The economy was near stand-still in the second quarter as Ankara shut schools and some businesses, closed borders, and adopted weekend stay-home orders. Some factories were halted until the economy was mostly re-opened in June.
The second-quarter plunge combined with a severe hit to the key tourism sector means the economy is also expected to shrink for the full year.
The median estimate of 14 economists was for a contraction of 1.9% in 2020, with predictions ranging between declines of 1% and 3.8%.
Turkey’s economy last contracted on an annual basis in the midst of the global great recession in 2009, by 4.7%. It shrank by 13.1% year-over-year in the first quarter of that year.
GDP growth had since averaged more than 5% on the back of cheap foreign funding and a construction boom until a currency crisis in 2018 prompted another recession.
The central bank – which cut rates aggressively since mid-2019 – has held policy steady the last few months as the lira dropped to record lows, threatening bigger problems for the economy.
Seen as a precursor to growth figures, industrial production contracted 16.9% year-on-year in the second quarter. Since then, trade, capacity utilization, and business confidence indexes have gained traction.
The Turkish Statistical Institute will release the GDP data for the second quarter at 0700 GMT on Aug 31.