Economics Turkey Enters into First Recession

Turkey Enters First Recession in a Decade as Elections Loom.

 

“Unlike Turkey’s past V-shaped recoveries, there’s the significant risk that the recovery will be much slower this time round,” said Inan Demir, an economist at Nomura International Plc in London. “The entire Turkish economy may be facing deleveraging pressures.

“Turkey was one of the fastest-growing emerging economies in 2017, but its growth wasn’t balanced. Excess government spending and rapid credit growth caused imports to surge and the current account deficit to widen. Unsurprisingly, the economy is paying the price for past excesses.”

--Ziad Daoud, Mideast economist.

In an effort to restart growth, the government has heaped pressure on state banks to ramp up lending, helping annualized credit growth turn positive last month for the first time since August. It recapitalized three of its lenders by selling bonds to Turkey’s unemployment fund, and is working on a fresh plan to further bolster state-owned banks’ capital.