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According to Bloomberg, Turkey had one of the best growth performances in the second quarter, but the economy of Turkey is showing signs of a slowdown. Some investors say that this slowdown will turn into a technical recession later this year. During the three months through June, the gross domestic output rose 5.2%, which is in line with the 5.3% median estimated by a Bloomberg survey. Data shows that consumers and investors are slowing down, while government spending and exporters prevented a more rapid slowdown. The lira depreciation will force the government to reduce spending and the central bank to raise borrowing costs to stabilize the financial markets according to Inan Demir, an economist at Nomura International in London who had the most accurate prediction in the Bloomberg survey. Demir expects two consecutive quarters of contraction in the economy: a technical recession. Lira was traded 0.4% lower at 6.4372 per dollar at 12:15 p.m. in Istanbul, bringing the year’s losses to around 41%. The article states that the latest run on the lira began with the incident between Ankara and the U.S over an American pastor held in Turkey for almost two years on espionage and terrorism related charges. Turkish policy makers led by President Recep Tayyip Erdogan accused the U.S. of waging an economic war and using the currency as its main tool of attack.

Will the consumers and inverstors continue to slow down their pace? Will Demir's prediction hold up for the next consecutive quarters? 



 This article was written September 10, 2018. 

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  • Good analysis, Klerisa! 


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