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May 14 2019

Turkey may enter double-dip recession, economist tells Bloomberg

Turkey may be facing the prospect of a double-dip recession, Inan Demir, an economist at Japanese bank Nomura, told Bloomberg.

Losses for the lira against the dollar will weigh on economic activity in the second quarter of this year, Demir said, according to the news wire.

Turkey’s industrial production grew a monthly 2.1 percent in March compared with February, the third-straight increase on that basis, the country’s statistics agency said on Tuesday. That could mean that two-straight quarters of contraction in the second half of 2018 came to an end in the first quarter of this year, Bloomberg said.

Annual industrial output fell 2.2 percent in March, half of the 4.4 percent contraction predicted by the median forecast of eight analysts surveyed by Bloomberg.

But the lira has slumped by almost 15 percent against the dollar this year after last year’s losses of 28 percent. A rerun of March 31 mayoral elections for Istanbul, to be held on June 23, and political tensions with the United States over plans to purchase Russian S-400 missiles are also weighing on investor sentiment.

“The financial market volatility since late March and ongoing political uncertainties will weigh on economic activity in the second quarter,” Demir said.

Turkey is in the middle of an economic downturn after a currency crisis in the summer led to a surge in the price of imports and drove inflation to more than 25 percent. Annual price increases have since slowed to less than 20 percent. Consumer and business confidence has also improved, though remains at low levels.