Turkey’s economy contracted by 0.2% quarter-on-quarter from July to September, according to the Turkish Statistical Institute, marking a second consecutive quarterly decline and confirming the country is in recession.
The economy showed 2.1% year-on-year growth in the third quarter, down from 2.4% in the second quarter.
Household consumption fell by 0.3% from the previous quarter, and government consumption decreased by 0.4%. On a yearly basis, household consumption rose by 3.1%, while government spending dropped by 0.9%. Nicholas Farr, Emerging Europe Economist at Capital Economics, noted that data from the central bank indicated slowing domestic demand, which is reflected in the latest figures. “This could raise expectations that the central bank may cut interest rates as soon as its December meeting,” Farr said, though he cautioned that this might be premature.
Turkey’s inflation remains high, with an annual rate of 48.6% recorded in October. The central bank’s key interest rate has been held at 50% for eight months, contributing to suppressed consumption. Analysts anticipate that interest rate cuts may start early next year to stimulate the economy. Imports of goods and services fell by 9.6% year-on-year in the third quarter, aiding in a reduction of the trade deficit.
