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Turkey tumbles into recession as polls loom

AFP  |  Ankara 

Turkey's economy fell into its first recession in a decade, official data showed on Monday, just weeks before faces local elections where growth and inflation will be key issues for voters.

Economic output contracted by 2.4 percent in the final three months of the year compared to the third quarter on a seasonally and calendar-adjusted basis, the (TUIK) said.

That followed a revised 1.6 percent contraction in the third quarter.

Two consecutive quarter-on-quarter contractions in economic output is widely considered to be the definition of a recession.

The flagging economy coupled with a currency crisis last year that battered the lira are sensitive issues for Erdogan and his ruling before the on March 31.

The Turkish leader, in power since 2003 first as and then as president, has often boasted of the country's strong growth during his time in government.

Growth came in at 2.6 per cent for 2018 overall, but that was still much lower than the 7.4 per cent recorded in 2017, a turbulent period following the 2016 failed coup and terror attacks.

The economy shrank by 3 percent in the fourth quarter of 2018 compared with the same period the previous year.

Inflation has also remained high. It struck a 15-year peak in October at 25.24 per cent before falling below 20 percent in February, with hit particularly hard.

has sought to curb consumer prices, especially for produce consumed everyday in Turkish households.

Turkish authorities last month set up their own vegetable stands in a bid to force markets to lower

But analysts said economic data showed inflation was still weighing on household consumption, and domestic demand was weak.

Turkish Berat Albayrak, who is also Erdogan's son-in-law, said on the data was as expected, but "the worst is behind us".

That analysis was shared to some extent by the London-based research firm, but they offer cold comfort for Turkey's economic outlook.

"While the worst of the downturn may now have passed, the weak carryover means that we expect GDP to decline by 2.5 percent this year," said Jason Tuvey, senior emerging at

Albayrak blamed the recession on "speculative attacks" and the current global economic slowdown.

While Turkey's economy was hit when US doubled tariffs last year on Turkish and aluminium, confidence was further eroded by a bitter row over a detained American pastor.

The lira plummeted in value in August. While an aggressive interest rate hike in September helped brake its fall, economic activity stalled while prices of goods shot higher.

The last time entered a recession was in 2009 after the global economic crisis hit foreign and domestic demand.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 11 2019. 16:20 IST