Turkish economy to contract 1.5 pct in 2019 - Reuters poll

The Turkish economy will shrink by 1.5 percent in 2019 and see only modest growth in the following two years, a Reuters poll of more than 40 economists showed on Wednesday.

The country’s economy grew by 1.3 percent in the first quarter compared to the previous three months, emerging from a technical recession in the second half of 2018.

However, Turkey may face a possible double-dip recession starting in the second quarter of this year that will last until the fourth quarter, the Reuters poll said. In the second and third quarters of 2019 the economy is expected to contract by 2.5 percent and 1.1 percent, respectively, followed by a growth of 1.0 percent in the final three months of the year, the poll medians showed.

Reuters said there had been a side range of estimates, with economists expecting a growth of 1 percent in 2019 to those forecasting a 5 percent contraction. The poll sees growth of 2.4 percent in 2020 and 3.4 percent in 2021.

Turkey’s economy last contracted on an annual basis in 2009, by 4.7 percent.

The Turkish lira hit record lows last year following a diplomatic row between Ankara and Washington over the almost two year detention of an American pastor. The currency has lost almost 10 percent of its value this year after declining 28 percent in 2018.

As the slide in lira pushed inflation to a 15-year high, Turkish companies have been facing difficulties in repaying their foreign currency-denominated debts. According to a new omnibus bill submitted to parliament last week, the government will take steps that include measures for 400 million lira ($70 billion) worth of bad loans of companies.

The Turkish government so far has tried to reverse the economic downturn by a surge in public spending, state-bank sponsored lending to businesses and consumers, tax cuts and employment incentives.