Page 21 - TURKRptAUG19

3.1 Macroeconomic overview
Turkey's economy is expected to contract in 2019 for the first time in a decade, according to the results of a Reuters poll released on July 18. Only modest growth would be seen in 2020 and 2021 in the eyes of the more than 40 economists who took part in the survey. The poll median forecast showed the Turkish economy shrinking 1.5% this year. The government's own sharply- lowered forecast is for an expansion of 2.3%. A wide range of estimates were given by respondents in the July 4-16 poll. They ranged from growth of 1% to a contraction of 5%. The poll medians predict growth of 2.4% in 2020 and 3.4% in 2021. "Early indicators for Q2 point to a renewed slowdown because of financial market volatility and elevated political uncertainty, which raise the risk of a double-dip recession," economists at Nomura told the news agency. In the second and third quarters of 2019 the economy is forecast to contract by 2.5% and 1.1%, respectively, before returning to growth of just 1.0% in the final three months of the year, the poll medians showed.
Second quarter GDP growth is due to be announced on September 2. Turkey's economy last contracted on an annual basis in 2009, by 4.7%. From 2010 to 2017, its compound growth rate was 6.6%. That was much due to a construction boom driven by cheap capital. Following last year’s lira crisis, the Turkish economy contracted 2.6% in the first three months of the year after shrinking 3.0% in the fourth quarter of 2018. The central bank hiked its policy rate to 24% in September in the face of the currency crisis and has left it unchanged since. The central bank governor Murat Cetinkaya was fired on July 6 for not following orders. His successor, Murat Uysal, has hinted that rate cuts are coming. Fitch Ratings cut Turkey's sovereign rating deeper into junk, saying Cetinkaya's dismissal heightened doubt over authorities' tolerance for a period of sustained below-trend growth.
Turkey’s economic contraction projected to resume says IMF in latest outlook update. There is a subdued outlook for emerging and developing Europe in 2019 largely as a reflection of prospects for Turkey, “where—after a growth surprise in the first quarter from stronger-than expected fiscal support— the contraction in activity associated with needed policy adjustments is projected to resume”, the International Monetary Fund (IMF) said in its latest half-yearly update of its World Economic Outlook (WEO), released on July 23.
21 TURKEY Country Report August 2019 www.intellinews.com