POLL-Turkish economy to expand in Q3 and grow 0.5% this yearReuters | Ankara | Updated: 29-11-2019 16:30 IST | Created: 29-11-2019 16:27 IST
Turkey's economy is expected to have returned to year-on-year growth in the third quarter of 2019 after three consecutive quarters of contraction, a Reuters poll showed on Friday, while forecasts for year-end growth also turned positive. The economy went into recession last year after a currency crisis saw the Turkish lira lose nearly 30% of its value against the dollar, which sent inflation and interest rates soaring and caused domestic demand to weaken significantly.
But there have been signs of recovery since then, as inflation fell to single digits in October, largely due to a so-called base effect, and loan growth accelerated thanks to rate cuts by the central bank. The median estimate in a Reuters poll of 17 economists showed the economy expanding 1% year-on-year in the third quarter. Forecasts ranged from a contraction of 0.2% to an expansion of 1.6%.
Private consumption improved in the third quarter, while stocks also supported growth, said Ozlem Bayraktar Goksen, chief economist at Tacirler Yatirim. "But the most important factor is the positive annual base effect," she said, adding that contribution from exports, which supported the economy strongly in previous quarters, had declined sharply in the third.
"Due to the positive base effect in the last quarter of the year, we expect a stronger positive growth. We expect a growth of around 5% for the fourth quarter," she said. The median estimate of 14 economists for 2019 annual growth stood at 0.5%. Estimates ranged from a 0.8% growth to a 0.9% contraction.
Growth expectations for the third quarter in a previous Reuters poll had been negative and the median estimate for year-end had been 0%. Expectations for both turned positive due to higher-than-expected loan growth and confidence indices pointing towards a moderate recovery in the economy, Goksen said.
The economy had contracted 1.5% year-on-year in the second quarter. Industrial production, a key signal of economic activity and widely regarded as an indication of growth, expanded 3.4% year-on-year in September. The calendar-adjusted index declined 0.4% in the third quarter compared to the previous year.
The government's own sharply lowered forecast for the year envisages growth at 0.5% in 2019, and 5% in 2020. Finance Minister Berat Albayrak was quoted as saying on Wednesday that the economy would expand around 4-5% in the last quarter of 2019. Third quarter GDP growth is due to be announced on Dec. 2 at 0700 GMT. (Writing by Ezgi Erkoyun; Editing by Dominic Evans)
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