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Feb 14 2019

Turkish economic growth, inflation expectations decline

Expectations for economic growth and inflation in Turkey declined in a central bank survey of experts as a downturn in economic activity persisted.

Inflation in 12 months was expected at 15.47 percent, down from 15.91 percent in the same monthly survey in January. Predictions for economic growth for 2019 dropped to 1.2 percent from a previous estimate of 1.4 percent, the central bank in Ankara said.

Consumer price inflation in February was seen at a monthly 0.76 percent.

Turkish inflation has eased to an annual 20.4 percent in January from a 15-year high of 25.2 percent in October, but the most recent data suggests the slowdown has lost pace. Demand among consumers for goods and services has declined sharply after a currency crisis last year, spurred on by concern for an overheating economy and a political crisis with the United States.

The economy contracted on a quarterly basis in the three months to September and high frequency data for items such as monthly industrial production and consumer confidence show the contraction may be continuing into 2019.

The lira could trade at 5.99 per dollar by the end of the year, according to the survey, compared with a previous prediction of 6.12 per dollar. The currency fell 0.4 percent to 5.3 liras per dollar at 5:10 p.m. in Istanbul.

The current account deficit for 2019 was estimated at $23.6 billion, down from $24.7 billion in the January poll, the central bank said. The lira’s slump has hit demand for imports particularly hard while Turkish exports have increased as they became cheaper for foreign customers to buy.

The central bank said it interviewed 96 people, including 76 experts from the financial sector, 12 from industry and eight professionals.